Iron ore (2)
Ships waiting to be loaded with iron ore are seen at the Fortescue loading dock located at Port Hedland, in the Pilbara region of Western Australia, December 3, 2013. Reuters/David Gray

Chinese futures in terms of iron ore prices sustained a downfall on Friday. This comes on the heels of Australia’s central bank’s expectation that prices of commodities will go down again.

The most-active contract on the Dalian Commodity Exchange suffered almost 4.8 percent to 674 yuan a metric ton – a two-week low. It eventually settled at 698.5 yuan. This comes in contrast with Tuesday’s high, recorded at 741.5 yuan.

“I do think that commodity prices are going to come back off again: we shouldn’t start to think that the iron ore price is going to stay around $90,” Reserve Bank of Australia Governor Philip Lowe said to a parliamentary panel in Sydney on Friday. He said there is expectation that Brazil’s production will increase. Higher prices, Lowe added, can enhance output in China.

A pullback is expected, according to BHP Billiton Ltd. and Fortescue Metals Group Ltd. “Iron ore prices have risen too fast,” Wei Fengqin, an analyst at Shanghai Cifco Futures Ltd., told Bloomberg. Fengqin also stated the steal was performing relatively weaker. “In the meantime, stockpiles also keep rising. Funds are likely to be leaving.”

Iron ore with 62 percent content in Qingdao slumped to $90.50 a dry ton on Friday. According to Metal Bulletin Ltd, the same had sustained a downfall of 3.7 percent two days before. In comparison, Tuesday’s high was recorded at $94.86.

According to Shanghai Steel Home E. Commerce Co., port holdings in China surged 0.5 percent to 127 million ton last week. However, Goldman Sachs Group Inc., stockpiles are at a risk of a downfall.

Suggestions of an iron ore decline were also made by the China Iron & Steel Association. “Prices are rising rapidly,” the group said in a statement on Thursday. “That is due to speculation. This deserves attention.”

“There were very good reasons why prices rallied,” Ralph Leszczynski, head of research at ship broker Banchero Costa & Co., said. “But whether all this justifies prices over $95? I don’t know. I think prices have risen too much too quick and a bit of a correction was overdue. Over the next few weeks it could go down even to $80.”