Most of the steel supply chain -- including iron ore and coal -- is swimming in overcapacity; it expanded rapidly to satisfy China's appetite for high-rise construction. Iron ore prices have rebounded after setting a low last fall. Hopes run high for perpetual stimulus programs in China. But China has been running stimulus programs for years on end. Its banking system cannot afford to support construction activity at its current breakneck speed. The laws of economics tell us that activities like construction have declining marginal returns.

There is a stimulus saturation point. When it is reached, iron ore prices will fall back to marginal costs in the range of $60-80 per metric tonne. At such prices, only the largest, low-cost miners can break even. Here are Credit Suisse's estimates of different miners' cash costs.