Iron ore prices have dropped to a seven-month low amid concerns about waning demand from China, the world’s top consumer of the steelmaking ingredient.
China now accounts for almost half of global steel production. Its mills’ hunger for iron ore, a key steelmaking ingredient, determines the strength of the Australian dollar, the cost of ocean freight, and the profitability of mining in South America. Any hint that the Chinese steel boom has peaked sends iron ore prices skittering.
But after years of breakneck expansion, liquidity problems have started to bite. Some private mills in Tangshan, home to about a quarter of China’s steel capacity, are empty and silent after owners ran out of cash to pay workers.
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