Iron ore’s recent rally back above US$40 per tonne appears to be short lived, with the market forecasting a slide back into the US$30's per tonne region.
Earlier this week the metal saw a brief revival, lifting up to just above US$43 per tonne after reaching ten year lows of US$37 per tonne.
According to Citi head of Asia commodity research, Ivan Szpakowski, the metal is due for another decline, pointing to the sharemarket slaughter China experienced in its markets earlier this month.
Szpakowski stated that that China’s ongoing bearish economy will further damage commodity prices.
The analyst has been historically negative on the metal, having forecast downwards movement for the commodity since 2014.
Last year he accurately predicted it would slide below the US$40 per tonne watermark.
''With 2014 and 2015 facing seemingly inescapable surpluses, the question becomes the price needed to force sufficient production curtailments to bring the market back into balance in 2016.,” he said two years ago, forecasting the market movement.
The current dire situation is compounded by the fact Chinese port iron ore stockpiles have reached a seven month high, with little indication of their reduction any time soon.
"Stockpiles have been on the rise because domestic demand is getting weaker and shipments from the major producers have increased," Dang Man, an analyst at Maike Futures in Xi'an, said last week, according to mining.com.
Mills have "been cutting production, which reduces demand for iron ore; so a lot of the stocks have remained at ports".
Prices have begun slipping below US$43 per tonne.