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BEIJING: China's iron ore imports fell for a second month in November, customs data showed on Saturday, pulled down by waning restocking demand at steel mills as profit margins narrow.

The world's top steel producer brought in 86.25 million tonnes of iron ore last month, down 2.4 percent from 88.4 million tonnes in October and down 8.8 percent from 94.54 million tonnes a year earlier, data from the General Administration of Customs showed.

For the first 11 months of 2018, China's imports of the steelmaking ingredient reached 977.89 million tonnes, down slightly from 991.26 million tonnes in the same period the previous year.

With plunging steel prices amid high output levels since late October, profit margins at steel mills have fallen to the lowest in years, forcing producers to rein in costs by using more low-grade iron ore and by reducing their input of scrap steel.

"Steel mills and iron ore traders are tending to be cautious at this moment. They are only purchasing the amount of iron ore they need rather than hoarding a lot in warehouses," Zhao Yu, an analyst at Huatai Futures, said before the data was released.

Iron ore stockpiles at Chinese ports had fallen to a one-year low of 138.6 million tonnes as of Dec.7, while inventory at steel mills also dipped to its lowest since early October, data compiled by Mysteel consultancy showed.

Zhao also expects some steel mills that have higher production costs to reduce output by arranging more maintenance until steel prices bounce back.

Utilisation rates at steel mills across the country fell for a third straight week in Dec. 3-7, to 65.88 percent, Mysteel data showed. However, that was higher than the 62.02 percent in the same period last year.

"We're unlikely to see a big increase in iron ore demand in the coming months and even throughout next year... But we expect it will still be firm and stable," said Zhao.

Vessel-tracking and port data compiled by Refinitiv suggests China will only import about 66.42 million tonnes of seaborne iron ore in December.

Copyright Reuters, 2018