Both Dalian and Singapore's iron ore futures dropped sharply on August 9 as China’s restriction measures on steel production became effective, thereby suppressing the demand for iron ore.

Market observers predicted that China will implement more restrictions on steel production in the coming months. Since the steel industry accounts for around 15% of China’s carbon emissions, the government is trying to control the steel industry by limiting steel production below last year’s level and raising export tariffs on steel products.

According to China Iron and Steel Association (CISA), the daily output from large steel enterprises at the end of July had a year-on-year decrease of 3%, which was the first drop this year.