Iron ore prices extended losses after last week's plunge to a 14-month low as China's restrictions on industrial activity in some regions hurt demand for the commodity. Nonetheless, iron ore has lost about 60 percent of its value in a broader retreat from a peak of $230 in May. Going forward, analysts see more pain with the base metals to continue to trade with a negative bias in the coming days.

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On Monday, iron ore futures in Singapore slid below the $100 per tonne mark once again before recouping some of those losses. On Friday, the futures had slid below the $100 per metric tonne mark in intraday trade for the first time in 14 months.

Metals may have found the reason for a correction after the sharp surge in the past few months, say analysts.

Navneet Damani, Head of Commodities and Currencies Research at Motilal Oswal Financial Services, remains cautious on most metals for the short term as "the weak hands will have to find their way out". However, the medium-picture still looks promising to him.

The metals complex looked quite overheated after roaring since the start of the year. "Some metals have doubled from the lows hit in 2020 and could find it difficult to sustain such highs, given the rapidly changing macros and the spread of the coronavirus once again," he told CNBCTV18.com.

Will it impact Indian companies?

India's infrastructure push along with tightening supply of the key steel-making ingredient from China is likely viewed as a positive for some Indian companies.

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The dip in iron ore prices is going to boost the profitability of companies such as JSW Steel and Jindal Steel if demand and steel rates are stable, AK Prabhakar, Head of Research at IDBI Capital, told CNBCTV18.com.

"The government is spending on infra projects on the domestic front and demand will be stronger for the Indian companies going forward," said Kshitij Purohit, Lead International and Commodities at CapitalVia Global Research.

China’s plan to clean up its heavily polluting industrial sector has primarily hurt the price of iron ore. Authorities in the world's biggest importer of iron ore want to reduce air and water pollution and bring down its energy consumption.

"China's crackdown and strong gains in the dollar in anticipation of early tapering is pulling metals lower. The market will get further directions after this week's Fed meeting... It could see 2-3 percent corrections from current levels in next two-three sessions," Manoj Kumar Jain, Director-Head of Commodity Research at Prithvi Finmart, told CNBCTV18.com.

Strength in the dollar has also dented the prices of iron as well as other base metals, as investors await updates from the Federal Reserve's policy meeting this week.

The dollar index — which gauges the greenback against six peers — appreciated to a one-month peak of 93.4 on Monday amid risk aversion in the markets ahead of the FOMC's policy outcome. The greenback — just like gold — is often considered a safety net against uncertainty in riskier assets. The US central bank is due to release its policy statement on Wednesday.

Upbeat data on retail sales and retail sales from the US send signals to the Federal Reserve for early tapering, Jain said.