Iron ore futures surrendered early gains to trade lower on Wednesday, as sentiment was spooked by resumed market talks of China's plan of trimming crude steel output to rein in oversupply plaguing the industry.

Singapore iron ore futures experienced an upswing on Tuesday, fueled by optimistic projections of heightened demand from the steel industry. These expectations are tied to the anticipated resumption of production by steelmakers in northern China,

China’s latest attempt to stimulate economic growth cannot come fast for Australia’s iron ore industry where second tier miners are being rocked by falling prices.

Prices of Singapore iron ore futures rose on Tuesday, driven by expectations of increased demand as steelmakers in the northern region of China, the top consumer, are set to resume production following the conclusion of its annual parliament meeting.

The analysts estimate that a 50 million tonne cut in China’s steel production might only reduce global iron ore demand by approximately 15 million tonnes, equating to a mere 1% of the global seaborne market. This modest impact suggests that iron ore demand is not as sensitive to changes in steel production as it might seem.