According to reports released by the China Iron & Steel Associate, the country's daily crude steel output fell 9 percent to reach 1.547 million tonnes in 10 days over the mid-September as compared to the previous 10 days of the month.

Steel mills in many areas have been ordered to put control over production in order to accomplish the year-end energy savings target, as the administration slashes the electricity use.

A group of the 77-members, represented by the CISA, have also reduced output by 5 percent to 1.305 million tonnes per day in the same period from the first 10 days of September.

While talking to media on the sidelines of an industry conference, the secretary general Shan Shanghua said, "It would be easy for steel mills to resume production if demand picked up."

Its members, consisting of large as well as medium-sized steel mills, managed to earn 3.81 billion yuan (A$ 590 million) of gross revenue in the last month, a growth of 33 percent as compared to July.

Talking to media, Hu yanping, analyst with custeel. com said, "But this is still the second-lowest month this year, and I expect daily crude steel output for the month to average less than 1.6 million tones."

Chinese steel mills have been pressured by expensive iron ore, the major ingredient for making steel, and will not be able to accept additional costs from a potential mining tax in Australia.