China's major listed steelmaker Baoshan Iron and Steel Co Ltd. had shutdown one of its steelmills in Shanghai, in an apparent surrender to the dangerously low and continued falling prices of iron ore and as well as waning global demand.

In a notice filed with the Shanghai Stock Exchange on Thursday, Baosteel said it decided to stop production in the Luojing factory in Shanghai, which mainly fabricates steel slabs used in making ships as well as manufacturing.

Despite Beijing's pronouncement this month of an AU$150 billion ($US157 billion) infrastructure building plan, Baosteel said it needed to close the facility to avoid incurring further operating losses due to the demand downturn in the slab market

"The government's infrastructure investment may only improve sentiment . . . I don't expect a big lift in steel demand," Zhang Dianbo, assistant president of Baosteel, told reporters at an industry conference in Dalian.

Baosteel did not provide any timeframe as to when production would resume at the Luojing factory.

A senior executive of Hebei Iron & Steel Group likewise told the same at the annual gathering, backed by the China Iron and Steel Association, that the company expects total 2012 production to drop from the 44.7 million tonnes registered in 2011 as the company reduced output activity.

Experts and industry observers believed more suspensions are likely to occur the in the coming weeks as China's economy cools down.

"The bigger issue is not what this one mill represents, but at prices at this low level, all the mills are under pressure," analyst Kuni Chen said in Bloomberg News. "I'd expect to see more production shuts, but this becomes a vicious cycle where production declines, then raw materials decline, and steel prices continue to decline."

Liu Xiaoliang, executive deputy secretary general of the Metallurgical Mines Association of China, informed the conference that 40 per cent of China's iron ore mines have put off operations.

"It's going to be painful for a lot of industries in China," analyst Mark Williams told Bloomberg. "And the pain is going to be felt beyond China's borders because a lot of companies elsewhere in the world have prospered from selling commodities and capital goods to China. The outlook for them is not so rosy."