Australia on Wednesday cut its 2015 iron ore price forecast to $52.90 a tonne from $54.40 previously, citing rising supplies of the steel-making ingredient amid softer demand growth.
"Increasing supply, predominantly from Australia, is forecast to drive prices down in 2015 and 2016 in the seaborne market," Australia's Department of Industry and Science said.
While global iron ore trade is forecast to increase only by 1.5 percent in 2015 to 1.4 billion tonnes, the lowest rate of growth since 2001, supply from Australia is projected to increase by 6 percent to 762 million tonnes, the department said in a quarterly commodities update.
Steel demand in China, the world's biggest consumer, typically picks up from September along with construction work after the summer lull. But a slowing economy has hit industrial activity, with steel consumption continuing to shrink this year after falling in 2014 for the first time since 1981.
Iron ore stood at $54.70 a tonne on Wednesday. It started 2015 at $71.20 a tonne.
World no. 3 producer BHP Billiton <BHP .AX> estimates about 100 million tonnes of sea-traded supply will enter the market in 2015, outweighing forecast demand growth.