China has suddenly found itself buying a third of the world’s iron ore at prices far below those of its domestic producers although they can still make money. But if prices fall a lot further, they will make nonsense of attempts to reduce import reliance. Ore quality is also an issue. Should it seek to protect itself from over-reliance on foreign iron ore, most of which comes from Australia and Brazil? Or should it welcome the steep fall in prices as helping its trade balance, lowering inflationary pressures and helping a domestic steel industry stressed by huge overcapacity.