Goldman predicts iron ore price at $ 40 by the end of 2016

In the report, the influential investment bank raised its quarterly forecast for iron ore from 47 percent to $ 55 per tonne. Further, iron ore will fall steadily from July to September to $ 45 and will drop to $ 40 in the fourth quarter.

Goldman Sachs expects iron ore to decline throughout 2016, although not as much as originally predicted, citing oversupply as the main reason.

At the same time, bearish forecasts carry bad news for steel production. In fact, prices have shown a huge increase over previous forecasts for Goldman Sachs iron ore. His forecast shows a 47 percent rise in the first quarter, a 20 percent jump in the third quarter, and a 14 percent drop in the fourth quarter.

Goldman analysts warned in a recent report that rising iron ore prices will naturally contribute to supply. “Marginal producers will have stronger financial positions and greater resilience in the face of oversupply,” said analysts Christian Lelon and Amber Tsai. Deutsche Bank and Citigroup also raised their 2016 outlook for iron ore from $ 39 to $ 45, although the market is mired in overproduction.

While iron ore managed to hold nearly 40 percent of profit in 2016 and recover 60 percent from nine-year lows, it continued to fall to $ 57.70 late last week - the largest weekly drop since December 2011, when prices fell from $ 142. per ton to $ 116 at the auction in five days.