Many of China’s high-cost iron ore mines are uncompetitive compared to imported iron ore, forcing numerous mines to shut down. From May to July 2016, China’s raw iron ore production fell by 8% year-on-year. After adjusting for iron ore grade, China’s iron ore output in 2016 is expected to decline by 12% year-on-year, and further drop by another 20% in 2017. The continued suspension of high-cost iron ore mines and the closure of several loss-making state-owned steel mills have led to a decline in China’s domestic iron ore production.

　　In 2016, China's iron ore imports are expected to increase by 4% year-on-year, reaching 988 million tons—a revision upward from the forecast made in June of this year. This reflects an unexpectedly stronger rebound in China's crude steel production, which drove a year-on-year increase of 11% in China's iron ore imports from May to July 2016.

　　In 2017, China's iron ore imports are expected to increase by 0.7% year-on-year, reaching 995 million tons. One of the reasons for this growth is the substitution of domestically produced high-cost iron ore. However, there remains some uncertainty in the forecast for China's iron ore imports, including the fact that the closure of Chinese iron ore mines is highly sensitive to government policies and could occur more rapidly than currently anticipated. On the other hand, following the rise in iron ore prices, many small Chinese iron ore mines can quickly resume production; thus, the reduction in China's iron ore output may not be as rapid as currently projected.