A major Chinese steel industry group has warned mills against ramping up production too quickly to avoid disrupting the post-summer economic recovery, especially after iron ore prices fell to their lowest since 2022, currently trading near $90 a tonne.

The price of iron ore used in steelmaking has fallen by more than a third this year, pressured by lower steel consumption, hitting Chinese manufacturers that are already struggling with losses. Steel demand typically picks up after the summer, posing a new challenge for producers.

“Steel demand will improve to a certain extent in September and October, which is a positive development for the market. However, we should be wary of factors that could prompt full production to resume, as that could immediately reverse any improvement in the market,” the China Iron and Steel Association said in a note after a meeting of steelmakers in southern China.

In another context, steelmakers in China are facing major challenges as a result of the country’s property sector’s decline, which has eliminated a large part of demand, leading to increased competition and a surplus in the market. Goldman Sachs noted in a recent note to clients that this situation “has created a difficult environment for the iron ore market in the short term.”

Singapore iron ore futures prices fell by as much as 2% to $90.70 per tonne, the lowest level since November 2022. They were trading at $90.85 per tonne at 11:51 a.m. local time, down nearly 10% this week.