Rio Tinto has dealt China's struggling steel mills another blow by giving notice that the Q3 FOB price for iron ore will rise to US$147 per ton, 19.5 percent up on Q2.

According to Zhao Xiang'e, a steel analyst at Shanghai Shenyin Wanguo Research and Consulting Co., the knock-on effect will be to raise the production cost of Chinese steel by 300-450 yuan (US$43.92 - 65.88) per ton.

"Falling steel prices in Q2 already wiped out Chinese steel factories' profits and the Q3 increase will push them into the red," Zhao added.

Xu Lejiang, chairman of Baosteel Group, said the Chinese steel industry is set to face its toughest time of the year.

China's business press carried the story above on Wednesday. China.org.cn has not checked the stories and does not vouch for their accuracy.