Macquarie Group has warned that China may suffer a shortage of iron ore after Chinese mills refused to sign a formal contract with ore producers, Bloomberg reported. A shortage would come at an inconvenient time for China, which has seen a recent revival in steel production. "Because the Chinese refused to sign a formal contract, they don’t have particular right to tonnage," said a Macquarie spokesman. "The iron-ore producers are pulling tonnage out of China and pushing it back into Japan, Korea, Taiwan and Europe, so there is an impending shortage in China." Chinese steel mills operated at full capacity in August amid declining domestic iron ore output; a slowing global economy had led mills to cut back last year. Despite the reductions, however, overcapacity remains a problem in China’s steel sector.