While iron ore prices continue to fall, the world’s largest producers are gaining market share at the expense of smaller players.

Iron ore prices have collapsed by nearly 50 percent over the past year, with the benchmark 62 percent FE iron ore for Qingdao delivery hitting a nearly six-year low of USD 58.15 per ton as producers relentlessly ramp production despite weakening demand from China, which consumes nearly half the global output.

At the same time, China’s dependency on imported iron ore is increasing – meaning that its domestic producers are ceding their market share. According to data released by China Iron and Steel Association, China imported 933mn tonnes of iron ore in 2014, up 13.8 percent year-on-year while China’s dependence on iron ore import rose by 9.7 percentage points to 78.5 percent.

The Big Four of the iron industry continue to increase production, much to the chagrin of the smaller producers. The production at Brazil’s Vale and Australia-based Rio Tinto, BHP Billiton and Fortescue Metal Group rose by a combined 112 metric tonnes in 2014, or 14 percent year-over-year.

The counter cyclical move by the Big Four – which already account for nearly half of the global output – is widely viewed as a strategy to drive smaller, higher-cost miners out of business. Even at the current low prices, the largest players can still squeeze out a profit, while the smaller competitors largely can’t.

Iron ore is largely used in steel production, and China’s domestic consumption of steel fell 3 percent year-over-year, the first time that it has recorded a drop in 30 years, according to consulting firm Wood and Mackenzie.

Larger state-owned steel mills in China such as Hebei Iron & Steel, Baoshan Iron & Steel and Angang Steel operate their own iron mines and have access to financing from national banks, making them relatively less sensitive to price fluctuations. Much of the reduction that has been occurring in China is at less efficient and smaller private mines, and this is likely to accelerate as the iron ore price falls further.

And even mid-size players are feeling the pinch. Bonds backing US-based Cliffs Natural Resources have suffered, with some losing as much as 15 percent of their value over the last year to trade at around 85 cents on the dollar.

Conversely, the Big Four’s bonds have been relatively resilient, in part due to their stable profit margins and strong balance sheets, along with industry dynamics that stand to favor the bigger players in the long run, according to The Global Iron Ore Industry Report first published by Debtwire Analytics in January.

Vale’s bond prices have held up over the last year, with some issues hovering at around 96 cents on the dollar, while some bonds issued by Rio Tinto and BHP Billiton have gained as much as five points to trade at around their par value.

Still, the performance of bonds issued by the smallest of the Big Four, Fortescue, has been weaker. Fortescue derives more than 90 percent of its revenue from China, and its notes maturing in 2019 are now trading at around 96 compared to 109 a year ago.

Looking ahead, given the slowing Chinese economy and the falling demand for steel in China, the iron ore industry is unlikely to regain its balance without production cuts.