Domestic steel prices fell to 3,670 yuan ($583) a metric ton on Aug 21, the lowest level in three years, according to a report in the Economic Daily.

Major Chinese steel producers lowered their steel prices in September based on the falling prices in August. The steel industry is still registering losses and investors lack confidence.

"It will take time for the downstream market to heat up again," said Ji Xiaoyun, an analyst at Lange Steel Information Research Center.

The research center estimated that steel prices will continue to fall in the short term.