The world’s biggest miners, having cashed in on China’s once-rampant demand for iron-ore, are starting to reel from the impact of their main customer’s economic struggles.

BHP Group, Rio Tinto Group and Fortescue in Australia, and Brazil’s Vale, all posted weaker profits this week, after prices of the steel-making staple beat a retreat in the face of China’s prolonged property crisis and its impact on construction demand in the world’s second-biggest economy. The firms most exposed to iron-ore fared the worst.

Iron-ore was one of the worst-performing major commodities in 2024, losing more than a quarter of its value, with the average price of benchmark futures falling about 7% from the previous year. The Singapore market peaked above $140 a ton before dropping to around $100 a ton, and analysts predict that further losses to below $90 a ton are likely by the end of 2025.

Demand for steel in China is now widely thought to have peaked, and its decline means less need for iron ore. Although the country still imports over one-billion tons a year, an inflection point is overdue. Steel mills are under increasing financial pressure and the government is unlikely to inject stimulus that would significantly boost the construction sector. Rising protectionism around the world is also set to undermine the country’s steel exports.

Worsening demand isn’t the only weight on iron ore prices. Supply is also likely to ramp up, with Guinea’s giant Simandou project expected to come online later this year, augmented by expansions in both Australia and Brazil.

Smaller, higher-cost miners will be worst hit, said Jiang Mengtian, the Shanghai-based chief iron ore analyst at consultancy Horizon Insights.

“The profit-squeezing process will gradually shift upstream, especially as the production capacity of iron-ore mines is expected to increase by about 46-million tons in 2025,” she said.

The biggest miners are relatively insulated by their lower costs, but they’re still feeling the pinch. BHP posted record earnings in the year to June 2022 as iron ore demand soared, but annual profits have since more than halved. Rio’s annual earnings from the steelmaking ingredient fell 19% from 2023, even though production remained flat.

The two Australian powerhouses have spent decades scaling up iron-ore mines to allow them to turn a profit even if prices fall. They’re also more diversified than some of their peers, with most of BHP’s revenue and over 40% of Rio’s coming from other metals.

“Rio is positioned to continue to generate strong cash flow from its iron ore business while also retaining, and increasing, its leverage to rising prices for copper and aluminum when the next demand cycle kicks in,” Chris LaFemina, an analyst at Jefferies Financial Group, said in a research note.

BHP and Rio saw their headline profit numbers drop by 23% and 8% respectively, but miners more exposed to iron, like Vale and Australia’s Fortescue, were in a worse position. The Brazilian firm relies on iron-ore for 80% of its revenue and saw one gauge of its latest quarterly profit slump by 41%, while Fortescue, a pure iron ore play, posted a 53% plunge in the first half.