I swear this needs an ingame tutorial – I must have had written this post over and over these past few days… 🙂
You need to consider the entire production chain and finish the entire loop. The game is based on demand, not supply. If any part of the chain is broken or unfinished, the entire chain breaks down. Work backwards – Does your factories have a line that delivers the goods they produce? (Look at the towns to see how many they will accept). The factory isn’t going to accept raw goods if it can’t get rid of its goods – and it will only accept as many raw materials as it can produce goods.
So in conclusion, if the Steel Mill can’t get rid of all of the goods it produces from the coal and iron it’s going to slow down production till it reaches a balanced level – even if this is zero (which causes the connected mines to do the same)
Additionally you really don’t need more than a single mine of each for a long time. They will happily increase production upwards of what 8 cities need in terms of goods before you need to look into a second one. Like I usually say – Work backwards. How many towns can you reach from the Steel Mill? Each one will usually accept around 50 – This is your maximum production of the entire loop.