Not an expert but how do you break a (hedge) contract? If...

Not an expert but how do you break a (hedge) contract? If contract is through an exchange then it's going to be guaranteed by clearing house. If it's with a steel mill (which I'm assuming) then unless planning to never produce again is a very risky proposition as miners will be reluctant to enter into offtake agreements and sell in future. Given fixed costs of setting up a steel mill that seems unlikely and remember despite recent slip in prices, until recently mills across the world were racing to get iron ore.

In hindsight the recent peak in IO prices was excessive but that also suggests so is this fall given traditionally China has relied on construction to meet growth targets when rest of economy is strugglig-like it is now