China $157bn 'building' boost gives iron ore miners hope In China, steel mills are running down their iron ore stocks as demand weakens. That has meant they can put off buying ore while keeping blast furnaces going. Meanwhile, they keep producing vast quantities of steel, even in the absence of demand to soak it up. The mills are however, aggressively cutting their steel prices and production is expected to fall. No wonder the iron ore price is on the slide. But of course in a panic, people are not thinking entirely clearly. As the destocking by steel mills comes to an end, and if China's high-cost iron ore producers halt output as other miners hope, prices should find some support. According to calculations by Bloomberg, around 20pc of the world's iron ore producers are operating at a loss at current prices - almost exclusively in China. "This is likely to prompt Chinese iron ore producers to scale back their production and traders to increasingly browse the world market for supply, especially since Chinese iron ore ... is of relatively low quality," Commerzbank says. Still, don't expect a spectacular recovery, the Credit Suisse team cautions. "Iron ore prices have overshot in our view and though we don't expect a dramatic bounce, should recover from here," the broker said. And, if the macro economic environment deteriorates, iron ore could fall more or stabilise at a lower level. Peter Richardson, an analyst at Morgan Stanley says production of iron ore will need to be reduced for at least two months so China can use up its stockpiles. There is light at the end of the tunnel, however. Chinese state-owned media noted on Friday that the country has approved $157bn of infrastructure spending to kick start the economy. This couldn't come soon enough for the world's major miners.