A collapse in Chinese steel demand to its lowest levels in eight years is an “ominous” sign for the ASX’s mining giants that the worst may not be over for the already beaten-down materials sector.

Steel rebar futures in China, a key indicator of construction activity, slumped to the lowest level since 2017 at the end of last week, as the world’s second-largest economy continues to grapple with a prolonged property sector crisis and waning industrial output.