BEIJING, Dec 30 (Reuters) - Benchmark iron ore futures in China fell nearly 6% on Wednesday, after the country urged the steel industry to produce less crude steel next year amid the government's carbon neutrality scheme.
The Ministry of Industry and Information Technology called on the steel sector to "resolutely" cut crude steel output and ensure an annual drop in 2021.
China, the world's top steel producer, has been trying to cut its steel capacity but rarely asked producers to slash output.
It has shut 150 million tonnes of annual production capacity during the country's 13th five-year planning period over 2016-20.
"Output cut can further improve the steel sector's supply and demand situation... break and ease issues of deformed profits due to high raw material prices," CITIC Securities said in a note.
Reasonable control of steel production can safeguard profit margins of mills and prevent high prices from getting transferred to the downstream sectors, it added.
The most-traded iron ore futures on the Dalian Commodity Exchange, for May delivery, closed down 3.5% to 984 yuan ($150.65) a tonne, the lowest in nearly three weeks. It plunged as much as 5.9% to 959 yuan a tonne during the session.
Futures prices of other key steelmaking ingredients also declined in early trade.
Coking coal futures were down 3.3% to 1,641 yuan per tonne, after shedding 4.7% in early trade.
Dalian coke futures slipped 0.1% to 2,822 yuan a tonne.
FUNDAMENTALS
* Prices of spot iron ore with 62% iron content for delivery
to China
* Steel rebar on the Shanghai Futures Exchange rose 0.3% to 4,256 yuan a tonne.
* Hot rolled coil inched 0.3% higher to 4,436 yuan a tonne.
* Shanghai stainless steel, for February delivery, declined 0.9% to 13,385 yuan per tonne.
($1 = 6.5248 Chinese yuan) (Reporting by Min Zhang and Shivani Singh; Editing by Subhranshu Sahu and Uttaresh.V)
