The steelmaking raw material's most-active November contract on the Singapore Exchange plunged as much as 7.4% to $125.40 a tonne.
On China's Dalian Commodity Exchange, the most-traded January contract ended daytime trading 0.2% lower at 769.50 yuan ($119.26) a tonne. It rose as much as 4.3% earlier in the session.
"China's plans to have a flat steel production growth this year look possible, as output curbs have been accelerated by power shortfalls," said ANZ senior commodity strategist Daniel Hynes.
Steel output in China, the world's biggest producer of the construction and manufacturing material, will have to contract 10% in annual terms between September and December, to stay in line with its decarbonisation goals, Hynes said.
China's crude steel output in January-August grew 5.3% from a year earlier, despite production controls intensifying beginning July.
For a graphic on China monthly crude steel output:
Tighter steel output curbs could be expected in early 2022, with China likely to keep air quality as clean as possible for the Winter Olympics in February, analysts said.
But while iron ore prices have drastically fallen from record peaks in May, the surge in costs of two other steelmaking inputs - coking coal and coke - continued.
Dalian coking coal jumped 7.1% to a fresh contract high, while coke advanced 5.8% to its strongest level since Sept. 10, as supply concerns were exacerbated by recent flooding in Shanxi province that has led to mine closures.
With the global energy crunch and signs of trouble in China's property markets weighing heavily on sentiment, construction steel rebar on the Shanghai Futures Exchange shed 4.2%, while hot-rolled coil slumped 3.6%.
Stainless steel lost 1.9%.
(Reporting by Enrico Dela Cruz in Manila; Editing by Amy Caren Daniel and Subhranshu Sahu)
By Enrico Dela Cruz