Chinese steel production has been dropping along with the steel price for weeks. But the situation in Tangshan, China’s steel capital, shocked even a seasoned steel market analyst recently: “The statistical data sound depressing, but what we observe on the ground is more devastating,” says Bonnie Liu of Macquarie Bank.

“Nearly all independent rollers have suspended production since the beginning of October, and most integrated steel mills are running at 30 to 50 per cent of their normal capacity, with large layoffs taking place,” she says.