Iron ore forecasts cut

Slowing global demand has resulted in banker Goldman Sachs cutting its iron ore price forecast estimates.

The company expects demand for the bulk commodity will level and steel production in China will slow.

China is the world’s largest iron ore buyer.

Goldman analysts Christian Lelong and Jeffrey Currie wrote in a report that iron ore may average $US139 a metric ton, compared with a previous estimate of $US144.

“We expect global seaborne iron-ore demand to revert back to its historical growth rate of 2 per cent per annum,” the report stated.

The SMH reports this year has been China’s weakest start since 2009, with prices dropping 7.2 per cent in 2013.

There are also concerns that reduced Chinese construction will lower demand for the steelmaking material.

Earlier this month, Morgan Stanley stated iron ore has peaked and will decline over the rest of the year, an expectation mimicked by analysts Deutsche Bank AG and Credit Suisse Group AG who have also forecasting lower prices.

"We expect global seaborne iron-ore demand to revert back to its historical growth rate of 2 per cent per annum," Goldman Sachs said.

"Steel production growth has slowed in China and we expect it will remain below GDP growth rates in the future."

Last year China experienced its weakest annual growth in 13 years, Bloomberg analysts predict China will expand 8.1 per cent this year and 8 per cent in 2014.

Rio Tinto's president of Pilbara operations, Greg Lilleyman told SMH new iron-ore supplies and slower growth in steel demand will weigh on prices during the second half of this year.

Earlier this year Australian Mining reported Chinese officials had accused major iron ore miners of manipulating the market.