A research arm of the Chinese government is forecasting steel consumption across the country to fall by more than one fifth over the next 15 years, vastly lower than Australia's big iron ore miners had expected.

Li Xinchuang, president of the China Metallurgical Industry Planning Association, said China's steel consumption peaked last year and would decline steadily over the coming decades.

He is forecasting it to fall by 23 per cent to 560 million tonnes by 2030.

"We have passed China's peak steel consumption and now we will see a gradual decline," he told The Australian Financial Review via phone.

Mining giants BHP Billiton and Rio Tinto believe China's steel production will peak above 1 billion tonnes in the years after 2025, before flattening off.

By contrast Mr Li is forecasting this peak to come more than a decade earlier and at levels 40 per cent lower than the big miners expect.

A spokesman for BHP on Wednesday reiterated the company stood by its 1 billion tonne forecast.

Rio Tito said on Wednesday it expects Chinese steel demand to reach 1 billion tonnes around 2030 as the urbanisation rate approaches 70 per cent.

Separately in an interview with Nikkei on Tuesday, Rio Tinto chief Sam Walsh was philosophical about the falling price saying his company's ultra low production costs give it a comfortable cushion and he was optimistic in face of a wave of urbanisation and industrialisation sweeping across emerging economies.

Mr Li is in the process of presenting his research to Chinese government agencies and said it would eventually be adopted as an official forecast. "We are the only ones in China that do this research," he said. "It will eventually be adopted by the Chinese government."

If annual steel exports of about 50 million tonnes are included, Mr Li's research findings echo an article written by prominent Australian economist, Ross Garnaut, in the Financial Review on Tuesday. Mr Garnaut said his "friends" in Beijing expected Chinese steel production to fall by about 25 per cent to 600 million tonnes by 2030.

It now appears Mr Garnaut's sources were well placed, as the Chinese government looks determined to guide steel production to more sustainable levels. A significant decline in steel demand is already being seen from the property sector, which is struggling with an oversupply of apartments, particularly outside the major cities.

Tim Murray, the managing director of J Capital Research, said steel mills had told him, while on a recent trip to China, that demand from the property sector was down 20 per cent. "Steel mills universally told us the market was the worst they had ever experienced and they were planning to reduce production this year in the range of 3 per cent to 7 per cent.

"A combination of higher infrastructure spending and exports has supported to sector."

Mr Murray said the overall steel demand was flat or slightly negative in the first three months of the year, but he expected it to tail off sharply over the coming months.

The expected slide in demand and falling prices comes as Beijing contemplates new measures to support local iron ore miners struggling to maintain production. China's state media is reporting that a 6 yuan ($1.28) a tonne cash subsidy may be handed to local miners as early as this month to prevent Australian and Brazilian producers from gaining further market share.

Others have suggested the government may rework its resources tax to lower the burden by about 10 yuan a tonne on local iron ore miners. "Even if there is a tax cut, it still won't cover the losses being incurred by the miners," Shi Zhenlei, an analyst at research firm Mysteel in Beijing, said.

But the tax breaks or subsidies may stem the losses of some state-owned miners and allow them to continue producing for longer. The government is reluctant to see its local industry shut down as the price hovers near decade-lows of $US50 a tonne, given the miners provide vital jobs and generate local tax revenue.

Beijing is also wary of becoming more reliant on imported iron ore, which already accounts for 60 per cent of China's total consumption.