China continues to scale down steel output

As China continues to scale down steel output, iron ore demand is expected to fall further next year, according to an industry forecast.

Demand for iron ore will fall by 4.2 percent in 2016 from a year ago, said the forecast, made by the China Metallurgical Industry Planning and Research Institute. Steel production will fall by 3.1 percent to 781 million metric tons during the same period, as economic growth continues to moderate.

Iron ore demand, which may fall by 0.4 percent this year, will decline by 4.2 percent in 2016. According to institute estimates, total steel output this year will be about 709 million tons, while iron ore consumption is estimated at about 1.12 billion tons.

There are around 2,460 steel smelters in China. Only about 300 of them can survive. Mergers and acquisitions will take place frequently in the next three years, according to an analyst.