The iron ore market is experiencing dramatic changes, with its price declining by 32% to US$92.61 since December 2013. The price is declining due to slower-than-expected construction industry growth in China, but mostly due to increasing production of iron ore in the mines of Australia and Brazil operated by BHP Billiton Ltd, Rio Tinto Group and Vale SA (also known as the Big Three).
China is responsible for 45% of steel consumption in the world. The construction industry accounts for over a quarter of total steel demand in China. Consequently, construction industry changes in China have the greatest influence on the demand for steel globally. Chinese economic growth is slowing, therefore growth in the Chinese construction industry is expected to ease to 7% in 2014, compared to 9.3% in 2013. Declining demand is pushing prices even further downwards.