Imports of iron ore by China, the largest buyer of the steel making ingredient, posted its biggest decline in seven months in August as steel production slowed.

Purchases dropped 13 percent to 44.6 million tons in August from 51.3 million tons in July, data from the General Administration of Customs showed yesterday.

The government's tighter measures on the property sector and a slowdown in demand in other industries have led to a 17 percent fall in domestic steel prices between late April and mid July, forcing some steel mills to face idle capacity.

Meanwhile production cutbacks are being enforced in Hebei, Shanxi and Jiangsu provinces as they cut off or ration power supply to inefficient steel mills in order to meet the nation's energy saving goals.

Swiss bank UBS has forecast the nation's steel supply could drop by 10 to 15 percent this month because of the power cuts.