The price of iron ore is in another downward spiral, trading at below $US60 per tonne.
Benchmark iron ore for immediate delivery to the port of Tianjin in China was last trading at $US58.90 per tonne.
The falls comes just weeks after the commodity hit a four-month high of $US63.60 per tonne.
ANZ says the commodity is likely to fetch $US53 per tonne in coming months, while Goldman Sachs was even more bearish, stating iron ore will average $US49 a tonne in the third quarter.
Meanwhile, a new report out by the Department of Industry and Science blamed the falling iron ore price on higher iron ore production in Australia and Brazil, coupled with falling Chinese steel production.
With China’s steel production is forecast to contract in 2015 and 2016 as the seaborne supply of iron ore increases, the iron ore price is expected to keep falling in 2015 to average $US54 per tonne, and even further in 2016 to average $US52 per tonne.
In 2016 world trade in iron ore is forecast to increase by 3.6 per cent to 1.4 billion tonnes as Australia and Brazil increase supply by 10 and 6 per cent, respectively.
The report says while this rise is expected to displace some of China’s higher cost domestic production, the price required to stimulate such a supply shift are “clearly lower than the prevailing spot price.”
It also forecast that other high cost iron ore exporters would go under as they could not withstand a period of strong price competition.
In 2014-15 Australia’s iron ore export s are estimated to have fallen by 27 per cent to $54.3 billion as a result of lower prices more than offsetting the increased volume.
Export values are forecast to fall by a further 3.9 per cent in 2015-16, to $52.2 billion weighed down by a further drop in the price of iron ore.