It was the worldwide demand for iron rails which projected Merthyr onto the world stage but every boom is likely to be followed by a bust. And so it was. Merthyr is situated at the head of a narrow valley and although it was plentiful in coal its iron ore became depleted. To bring in ore from other sources was uneconomic.
Steel gradually replaced iron and in 1891 the Dowlais Iron Company built the East Moors Steelworks near Cardiff docks. Iron, as a mass commodity, went into terminal decline.