Iron ore imports dropped for a second straight month as steel mills cut crude steel output on rising raw material costs and weak downstream demand. Analysts see no upturn signals in the near future, expecting the first four months to be the peak of this year's steel mill profits.

May iron ore imports were down 6 percent from April and 3 percent from a year earlier to 5.19 million tons, figures from the General Administration of Customs showed Thursday.

Analyst Zhang Lin of the Beijing Lange Steel Information Research Center told the Global Times that iron ore inventories in the nation's 19 major ports reached 73.76 million tons at the end of last week.

Steel analyst Wang Zhe with China Securities attributed the decline to climbing iron ore prices and declining downstream demand.

According to the GAC, average prices of imported iron ore, which accounts for over 60 percent of the country's total consumption, soared 36.6 percent from a year earlier to $106 per ton in the first five months.

Dragged by sluggish demand from downstream housing and automobiles, daily output of steel products, the two key ingredients of which are iron ore and coking coal, dropped 20,000 tons to 1.81 million tons last month on weak demand.

Many mills have chopped prices of their products to boost demand since mid-April. The profit margin of domestic steel mills was only 3.6 percent from January to April, below the country's industrial average.

Baoshan Iron & Steel cut prices June 4 by 300-500 yuan ($43.92-$73.21) per ton, the first price drop in eight months. Anshan Iron & Steel and Wuhan Iron & Steel followed suit, announcing 300-1,200 yuan ($43.92-$175.68) price cuts.

For the third quarter, the three miners are seeking a 23- 35 percent hike in iron ore prices and a 10-15 percent hike in coking coal prices.

"Domestic steel mills are losing money on the second quarter contract price. If iron ore prices increase in line with the quotations of the three miners, the hike will generate another 300-450 yuan ($43.92- $65.88) per ton," Zhao Xiange, a steel analyst with Shenyin Wanguo Securities, wrote in a report.

Zhang said price reductions wouldn't reverse the languishing domestic steel market.