The most widely traded iron ore futures on the Dalian Stock Exchange for September delivery fell 3.9% to 1,174 yuan ($ 181.33) per tonne at close.

The dollar also rose, reducing the attractiveness of commodities denominated in the currency.

The government has asked some steel producers in the Chinese provinces of Jiangsu, Fujian and Yunnan to reduce their production, as the country aims to keep its annual production at the maximum compared to 2020.

Meanwhile, iron ore arrivals in China picked up last week. Inventories of the ingredient on the port side increased for the third week and stood at 127.34 million tonnes as of July 18, according to consulting firm SteelHome.

Read more: Iron ore price rises following disappointing figures from major producers

Despite China’s decision to control steel production, the iron ore bull market is not about to end anytime soon, Nicholas Snowdon, head of base metals research and bulk at Goldman.

“Even though China is showing signs of decelerating steel demand growth rate in the second half of the year and 2022, the momentum for steel demand in the rest of the world and (developed market) is incredibly strong,” Snowdon told the Singapore Iron. Ore Forum.

“For now, it looks like a very tight market with very strong supply support and still robust demand growth rates.”

(With files from Reuters)