Beijing

CHINESE steelmakers are deepening the first production cuts in a quarter century as the bull market in iron ore drives up costs and squeezes profits.

Crude steel output will shrink as much as 2 per cent this year, according to the China Iron & Steel Association. That's lower than the group's March estimate of a 1.1 per cent decline and would be the first contraction since at least 1990. An acceleration in raw material costs and a collapse in steel prices has pushed the Bloomberg Intelligence China Steel Profitability Index to the lowest in almost seven years.