Iron ore prices to crash soon: UBS

The iron ore price may slump 54 per cent to around $US70 a tonne due to a big lift in supply from mining companies, according to UBS analysts.

Bloomberg reports UBS said a recent spike in prices may force more Chinese iron ore mines to come online, flooding the market and sending prices crashing by September.

“We expect a big correction in the third quarter. We see a big lift in supply” UBS analyst Tom Price said.

Bloomberg reports Morgan Stanley research estimates global iron ore supplies will climb 9.1 per cent this year, with most analysts predicting softening prices.

The UBS estimate is lower than most however, with ANZ previously forecasting prices to level out around $US140 and Westpac and predicting $US110 by the end of the year.

UBS has previously issued warnings about the iron ore price, and said last year that moves to expand production in the Pilbara could threaten the viability of the Roy Hill mine.

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