BEIJING: Chinese iron ore futures dropped as much as 3.5% on Tuesday after top steel-producing city Tangshan issued a second-level pollution alert forcing mills to curb production.

Output at steel mills and coking plants in Tangshan will be limited from Feb. 23 in response to expected heavy pollution, while production at hot rolled and cold rolled producers will be suspended, the local government said in a statement.

The most-traded iron ore futures on the Dalian Commodity Exchange, for May delivery, closed down 2.9% at 1,107 yuan ($171.34) a tonne. It fell as much as 3.5% during the session, the biggest intraday percentage loss since Feb. 2. Prices of other steelmaking ingredients also fell, with coking coal plunging 4.4% to 1,462 yuan a tonne and coke down 3.4% to 2,574 yuan a tonne at close. Steel prices on the Shanghai Futures Exchange were mixed.