On the other hand, there is one more baleful example to consider: the former Soviet Union, where output slumped to just a fifth of its 1988 level after the fall of communism, before gradually crawling back in recent decades to about 40 per centВ of peak volumes. South Korea barely paused for breath in 1997, with production dropping by a third the following year before quickly recovering and entering a boom that's still going on. JapanвЂ™s steel output fell by only about 20 per centВ from 1991, when its housing bubble burst, to its a low point three years later, before gradually edging down further during the 1997 Asian financial crisis and the 2008 Lehman shock to its current level about 30 per centВ below the peak. In other downturns, the slumps were more muted. Peak-to-trough, the decline was dramatic, falling more than half by 2009 before gradually picking up speed to its current reasonably steady state about 15 per centВ below 2006 levels. USВ steel demand had spiked in 2006, just as the property market was on the turn. Read |В Evergrande starts repaying investors with discounted properties Just how dramatic, though? A look at past steel crises gives some clues. Should a Lehman-style crisis spiral out from Evergrande, the impact would be dramatic.

Add to that the travails of China Evergrande Group, the property developer thatвЂ™s at risk of defaulting on some of its $300 billion of liabilities, and it makes up a bearish picture for ferrous metals.Д¬hina consumes half the worldвЂ™s steel, and its property sector alone accounts for about a fifth of global demand, according to Liberum analyst Tom Price. The price of iron ore futures in Dalian has dropped by half over the past two months, accelerating Monday after the government announced fresh winter pollution curbs for northern steel-producing cities, which typically cut output and demand for rust. From the way metal prices have moved in recent weeks, it looks like the wheels are falling off ChinaвЂ™s property market.

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