China steps up curbs on steel output

The recent plunge in iron ore prices may be just the start of what could be a sustained decline for the rest of the year as demand from the world's biggest consumer is widely expected to further drop under an increasingly strict government campaign to cut steel output to meet environmental and other goals, Chinese industry bodies and experts warned.

Iron ore prices have already been on a declining trajectory over recent days following record-highs earlier this year and further declines could have serious global implications given China's massive imports, especially from countries such as Australia, analysts said.

In a research note on Monday, the China International Capital Corp. (CICC), one of the country's biggest investment firms, warned that as China's domestic steel production is set to ease and that iron ore prices will likely drop to below $200 per ton.

"We expect that growth speed for China's steel production will turn negative starting in the third quarter and iron ore prices will also fall from the top," CICC said in the note.

Lifted by robust demand both at home and abroad, China's steel output has been rising sharply in the first half of the year. During the period, China's crude steel output jumped 11.8 percent year-on-year, according to the National Development and Reform Commission (NDRC), the top economic planner. China's steel exports rose 30.2 percent year-on-year during the period, the NDRC said.