Iron ore prices may record biggest drop in 2016

The average price of iron ore is expected to hit $ 42 per tonne in 2016, down nearly 25 percent when compared to average prices of $ 55.80 per tonne over the past year.

According to World Bank forecasts, iron ore prices may experience the largest drop among all metals during the current year. The quarterly report released by the bank significantly lowered its 2016 iron ore price forecasts.

The average iron ore price is expected to reach $ 42 per ton in 2016. This is significantly lower than the bank's earlier price forecast. Last October, the World Bank predicted that iron ore prices could average around $ 59.50 per tonne in 2016. The World Bank also predicts that iron ore prices in 2017 could average around $ 44.10 per tonne. Prices are expected to remain below $ 50 per tonne until 2019. He also expects prices to rise to $ 51 per tonne by the end of 2019.

The supply of inexpensive iron ore has increased in China. Stocks in Chinese ports are likely to exceed 100 million tonnes ahead of the Spring Festival, when steel production will weaken. When steel mills resume production after the holidays, iron ore stocks in ports should be reduced. Steelmaking activities after the New Year holidays tend to increase the consumption of iron ore. However, traders are not optimistic this year, primarily due to the slowdown in the country's economy.

Meanwhile, Chinese customs data show that the country's iron ore imports rose 17 percent to a record 96.27 million tons in December from the previous month last year.