China's internal infrastructure growth has slowed, causing the demand for iron ore to dissipate. In recent years, miners spent billions of dollars on projects that are no longer needed. Now there's an oversupply of iron ore. What does this mean for the mining companies?
In this episode of The Motley Fool's Where the Money Is, Motley Fool analysts Joel South and Taylor Muckerman discuss how mining companies are going to have to tighten their iron grips.
While smaller companies don't have the scale to drop prices, they will suffer until iron ore consumption picks up. Companies that produce at lower cost levels and have solid balance sheets -- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO), for example -- will be better protected from the current distress in the materials market.
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Joel South, Taylor Muckerman, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.