Dalian and Singapore iron ore futures extended losses on Wednesday, with demand prospects temporarily weighed down by China’s consideration to cut its crude steel output by around 2.5%.

The target was proposed by policymakers at a meeting last week but it has not yet been finalised, said sources familiar with the matter. Some officials said a cut of 2.5% was too high as the economy was still recovering and the target was expected to be set before the end of June, they added.

The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) ended daytime trading 2.15% lower at 865.5 yuan ($125.64) a tonne, its lowest since Feb. 15.

On the Singapore Exchange, the benchmark April iron ore was down 2.26% at $120.7 a tonne as of 0704 GMT, the lowest since Feb. 13.

“The news (of crude steel output cuts) may provoke worry in the raw materials market in the short run,” said Kevin Bai, a Beijing-based steel analyst at consultancy CRU Group.

Likewise, prices of other steelmaking ingredients such as coking coal and coke slipped further with the former DJMcv1 declining 0.38% and the latter falling 0.58%.

“Supply (of coking coal) picked up after many coal producers resumed production following the accident earlier last month while consumers and traders slowed their purchasing. Mounting inventories weighed on prices,” analysts at Huatai Futures said in a note.

Coal mines in several Chinese regions were ordered to carry out safety inspections last month after an accident killed at least two people and left more than 53 missing.

Steel prices continued to feel pressure from the raw materials market. Rebar on the Shanghai Futures Exchange slid by 0.84% to 4,153 yuan a tonne, hot-rolled coil dipped 0.35%, wire rod shed 1.77% and stainless steel lost 0.22%.

“The cost support to steel prices receded to some degree after prices (of raw materials) have recently posted evident falls,” analysts at Everbright Futures said in a morning note.

Source: Reuters