Iron Ore Mining
A miner holds a lump of iron ore at a mine located in the Pilbara region of Western Australia in this December 2, 2013 file photo. World no. 2 iron ore miner Rio Tinto said on July 16, 2014 expansion work at its mines and productivity gains led to a sharp rise in iron ore output as it steps up shipments to Chinese steel mills. Picture taken December 2, 2013. REUTERS/David Gray/Files

Relief appears nowhere for Australia's iron ore exporters as supply continues to exceed demand, prompting the Bureau of Resources and Energy Economics (BREE) to cut again its forecast of prices for the key-steelmaking ingredient in 2015.

With a 33 percent reduction on account of weak demand from China, BREE's new forecast is that the average price of iron ore in 2015 would be $63 per tonne, down from the $94 per tonne forecast in September.

For 2014, the average price would be about $88 per tonne on account of the 49 percent drop in prices for the year due to ramped up production by mining giants BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) despite the glut of supply in China.

YouTube/Platts McGraw Hill

Roubini Global Economics agrees with the not-so-bright outlook of BREE. It said, quotes Bloomberg, "The current market oversupply is expected to prevail through the start of 2015 in response to a likely ongoing cyclical downturn in China's housing sector."

It added, "More of China's production is expected to exit the market, particularly over the northern winter. A longer period of even lower iron ore prices may be required than previously expected to push supply out of the market."

The slide in iron ore prices continues. According to data compiled by Metal Bulletin, price of ore with 62 percent content shipped to Qingdao went down 1.8 percent to $67.90 per tonne.

It is the lowest price since June 2, 2009, logging a five-year record low, and bringing up the price slump for 2014 to 50 percent, notes the Sydney Morning Herald.

The declining price of Australia's top export commodity is "far deeper than anyone anticipated," said Wood Mackenzie analyst Andrew Hodge.

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