Australia’s Department of Industry, Innovation and Science has cut its iron ore forecast to $44.2 a metric ton from $45 a ton, in its quarterly resources report.
The forecast comes amid a
rally in iron ore prices this year, with prices jumping well almost 30 percent
year-to-date.
Still, although spot iron
ore price averaged $48 a ton in the first half of 2016, this was a 13 percent
decline from a year ago, the department noted.
"Despite the large
movements in prices, the market fundamentals are broadly unchanged - demand growth
is slow and the market remains well-supplied," the report said.
Australia is the world's
largest exporter of the steel-making material, shipments of which have been hit
by slowing growth in world largest importer, China.
The report also noted that
the spot price for iron ore from Australia traded between $40 and $66 a ton
from February to April due to speculative trading on the Dalian Commodities
Exchange in China.
The volume of iron ore
futures being traded on the Chinese exchange "grew rapidly,"
exceeding half a billion tons on 32 occasions in the three months.
The Australian Government
said prices were likely to moderate over the rest of 2016 due to stronger
supply growth and weak demand growth.
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