China's major steelmakers began to lower prices on June 17, in expectation of slowing market demand, reports China Daily newspaper

Eight Chinese steelmakers cut the price of their products on Wednesday for July delivery, after 27 mills reduced prices on Tuesday, following on from cuts by 21 others on Monday, according to data from the consultancy

Leading steelmakers, such as Baoshan Iron & Steel (Baosteel) Co Ltd and Anshan Iron and Steel Group, have cut prices for products to be delivered in July by 70 yuan ($11) to 200 yuan/t.

"As the rainy season is a slack period for steel products, when construction, which accounts for 45% of steel consumption, slows down, it puts pressure on steel prices and even iron ore prices," said Guo Yi, an analyst at Mysteel.

Brazilore fines with an iron ore content of 63.5% were sold at between 1,260 and 1,270 yuan a ton, including freight, on Wednesday at Qingdao port, down from 1,270 to 1,280 yuan a ton on Tuesday, and from 1,320 yuan per ton a month earlier, according to Mysteel's data.

Domestic average steel indexes reached 174.8 on Wednesday, down 1.24 percent from the previous week, and a decline of 1.41 percent from a month ago, as a result of sluggish market demand.

China's steel inventory in May fell 5.2% from a month earlier, the China Iron and Steel Association said in a statement on its website on Monday.

Steelmakers may face surging raw material costs and tightening monetary policy, the association said.

"The accumulative decline in steel prices will squeeze Chinese steelmakers' profits, and pressurize raw material prices, which may further lower steel prices, with the possibility of a decline by 300 to 400 yuan a ton in the future, " said Guo.

"This will also affect production. We expect to see steel production decline again on weaker steel prices," he said.

Chinese crude steel production rose 7.8% to 60.2Mt in May from a year earlier.