Spring is historically the peak season for steel demand in China. When futures plunge just ahead of that time of year, you know that something is not right.
Three years ago, prices for iron ore, the material used for steelmaking, rose so fast to record highs that Beijing had to intervene with vows to punish speculation. More than two decades of nonstop gains in real estate prices had left the local steel sector’s growth seen as almost guaranteed.
Now iron ore prices are plunging, down over tenth since mid February and by nearly a fifth this year. Oversupply coupled with China’s economic slowdown means the sector is becoming a dangerous one to invest in.
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