Iron ore, the main ingredient in steel, has suffered a nasty slump. Prices for iron ore delivered to the Chinese port of Qingdao have plummeted below $50 a ton (see chart), the weakest level since the data series began in 2008. Projecting the series further back suggests prices are at a ten-year low.
A rapid recovery is not on the cards. Demand from China has slid as its credit and property bubble have deflated. It would take a major stimulus, as opposed to recent micro-measures, to reverse this trend. Hence global consumption will fall this year, for the first time since 2009, reckons Deutsche Bank.
However, the flood of new supply from major miners such as Rio Tinto and BHP Billiton shows no sign of reversing just yet: they say they want to sell as much as possible for now, and would only start making losses if prices fall to $30 a ton.