Chinese iron mines shut amid price fall The Chinese iron ore and steel industry has painted a gloomy outlook for the sector with officials revealing that roughly 40 per cent of the country's iron mines have shut because low prices. The bearish tone at the annual gathering backed by the China Iron and Steel Association was reinforced on Thursday by Baosteel, the country's biggest listed steelmaker, which announced further production cuts amid weak demand. The cutbacks suggest that the industry has little faith that the $150bn programme in infrastructure projects that Beijing approved earlier this month would provide more than a temporary relief. Iron ore and steel prices initially rose after the spending boost was approved but have since fallen again. Over the past decade, China's steel demand has surged with double-digit growth but this has dropped to the low single-digits this year. As a result, overall profits at Chinese steel companies - which include names such as Baosteel, Ansteel and Wuhan Iron & Steel - plummeted by 50 per cent in the first half of this year compared with last year, according to official statistics. The drop in steel demand in China has, in turn, triggered a drop in iron ore and coking coal consumption, which is hurting some of the world's largest mining groups, including Vale of Brazil, Rio Tinto, BHP Billiton and Anglo American. Iron ore prices, which hit an all-time high of nearly $200 a tonne in early 2011, fell recently to a three-year low of $89 a tonne. The drop has prompted some miners to cancel multibillion investment projects in Australia, the biggest producer. But some relief could be under way as Chinese iron ore miners start to close pits as prices drop below their cost of production. Liu Xiaoliang, executive deputy secretary-general of the Metallurgical Mines Association of China, told the conference that low prices have forced about 40 per cent of the country's iron mines to suspend operations. Scarlett Chan, analyst at Citi in Hong Kong, said the production cuts reflected weak demand for iron ore. The benchmark iron ore with a 62 per cent iron content changed hands in the spot market on Thursday at $106 a tonne, according to pricing reporting agency Platts. One attendee at the Cisa iron ore and steel conference said more foreign miners than local ones were attending the meeting, a sign of the bearish sentiment in the domestic Chinese industry. The Dalian-based conference has traditionally set the tone of the next six to 12 months for the steel and iron industries. The recent volatility in iron ore prices has caused demand for iron ore hedging products to jump. In a sign of growing customer demand, CME Group announced on Thursday that it was launching a steel rebar swap futures product based on Chinese domestic prices that would begin trading on Nymex next month. Additional reporting by Javier Blas in London and Reuters in Dalian