“All steel growth over the last ten years has come from China and over the last six months, we’ve had a decelerating Chinese economy.

“We’ve also had Rio Tinto and BHP Billiton ramping up Australian exports. So we’ve seen record levels of Australian supply into a decelerating demand environment”, said Mr Gait.

A profit warning from FTSE 250 company Fenner, which makes conveyor belts for the mining industry, underscored the sector’s concerns. Fenner dropped 10.19pc to 350p on the mid-cap index.

Whitbread, which owns Costa Coffee and Premier Inn hotels, was one of the biggest climbers, up 1.16pc to £41.86, after Société Générale upgraded the company from sell to buy and increased its target price from 2900p to 4800p.

Société Générale’s note said that Whitbread’s Costa had “potential for improvement” in competing with Starbucks, which recently reported its first-ever sales decline in the UK.

Overall, the FTSE 100 closed down 0.39pc to 6844.51, while the FTSE 250 fared slightly better, closing up 0.35pc at 16010.25.

And while Fenner dragged down the FTSE 250, Dairy Crest was one of the biggest risers on the mid-cap index, up 3.78pc to 467p.

After posting a strong set of financial results last week, the UK’s only listed dairy company announced plans on Friday to cut the price of a litre of milk by 1.25p.