A surge in Chinese steel production to meet a post-coronavirus infrastructure building boom may have run its course for this year, as steel and iron ore inventories pile up and demand for steel declines.

The fall in iron ore prices over the past week from a six-year high of nearly US$130 per dry metric tonne in late August signals a slowdown in steel demand, according to analysts. The price of iron ore shipped by sea had fallen to about US$117 per tonne on Wednesday, according to S&P Global Platts.

Iron ore prices are a key gauge of the economic health in China and around the world, with high, rising prices indicating strong construction activity. In 2015, iron ore prices tumbled below US$40 per tonne when construction in China fell sharply as economic growth slowed.

China’s falling iron ore prices likely indicate a temporary cooling of economic expansion, as the boom in infrastructure and real estate projects that followed the lifting of lockdowns begins to slow after five months of positive growth.