China Economic Review reported that private steel mill Haixin Steel failed to pay back overdue bank loans last week.

News of the default was cited by Chinese steel traders as one reason for the jitters that ran through global iron ore markets this week and led to prices dropping to their lowest level since the aftermath of the global financial crisis in 2009.

Chinese steel mills are struggling with severe overcapacity and heavy debt loads, and more than half of them are losing money by some estimates. Officials may be confident that a default at the relatively small mill would not lead to systemic risk.