New reports are predicting more than 100 million tonnes of new iron ore supply will hit the market.
According to Fitch ratings, more than 145 million tonnes will be added to current supply levels over the next two years, Bloomberg reports.
This is an additional 10 per cent of existing levels, and solidifies the likelihood of the iron ore markets lack of recovery in the near term.
The Chinese port of Tianjin saw a slip last week, with the spot price falling 1.8 per cent to $43.40 per tonne, the lowest SteelIndex point since November 2008.
independent analyst Andy Xie believes the commodity will slip below US$40 per tonne, and will trade just above US$30 per tonne next year, The former Asia-Pacific head economist at Morgan Stanley previously pointed to the steel industry reaching a crisis point, adding they needed to cut production to drive demand.
Xie had also forecast the US$40 lows reached earlier this week, when the price was still in the US$60 sphere.
This oversupply is likely to continue to dog the market.
“The closure of high-cost iron ore mines has been slower than we previously anticipated, despite the sharp fall in iron ore prices since 2014,” Fitch said in its report.
“Global demand, led by China, has also been weaker than we previously anticipated, and is likely to remain muted through 2016.”