The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trading 5.9% lower at 731 yuan ($113.32) a tonne, after a five-session rally.

Chinese property developers face payment deadlines defaults before the end of the year, and with China Evergrande Group’s fate looking increasingly bleak, fears are mounting of a wider crisis in the sector that accounts for about a quarter of the domestic steel demand.

Chinese iron ore demand has already collapsed amid environment-related steel production controls, curbing imports which declined 3% in annual terms in January-September.

“In mid-to-late September, the number of blast furnace maintenance… showed an explosive increase,” Zhongzhou Futures analysts wrote in a note.

“Under the strict production restriction policy, it is doubtful whether the steel plants… can resume production on schedule in October.”

Steel mills in some 28 cities in northern China will have to cut production from Nov. 15 to March 15 next year, in order to clear the smog-blanketed sky in time for the Olympic Winter Games that will take place in February in Beijing and the neighboring Hebei province.

The Chinese volume of iron ore imports dropped to 95.6 million tonnes in September from 97.5 million tonnes in the previous month. 

(With files from Reuters)