Decline in China's demand for iron ore has forced global iron ore majors to lower prices.

Global iron ore majors including Rio Tinto Group, BHP Billiton and Brazil's Vale SA have told steel companies in China that they will lower iron ore prices by 10 percent from October. According to experts, the three giants posted the price cuts because Chinese automakers and builders have cut orders for steel.

First price cut this year

Statistics released by the General Administration of Customs show China's ore imports dropped by 2.5 percent in the first three quarters to 460 million tons.

"China is the largest buyer from the three giants. It is understandable that they should adjust their ore price based on China's demand for steel," a deputy general manager from China Minmetals corporation said.

"The decline in steel demand has resulted in the shrinking of demand for raw materials, which is the root cause of the price decline," Chen Ling, deputy director of the Metallurgical Industry Research Center was quoted as saying.

Iron ore imports will pick up in Q4

Steel enterprises in China restricted their iron ore imports in the first three quarters because of the high prices. The fourth quarter will see an increase in iron ore import as steel enterprises buy more. However, taking into consideration the 30 percent increase in iron ore prices in Q3, Chinese steelmakers will benefit little from the 10 percent price cut.

Reduce import dependence

China has boosted its own iron ore production in the last five years in a bid to replace some of its imports.

Large iron and steel corporations like Hebei Iron & Steel Group and Wuhan Iron and Steel (Group) Corporation are expected to boost iron ore production and cut imports.

Wuhan Iron and Steel Corporation has set itself a target to become totally self-sufficient in iron ore within five years.

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