Australia cuts iron ore forecast as miners raise output

Australia, the largest iron ore exporter, cut its price estimate for this year and predicted a further drop in 2015 as mining companies including Rio Tinto Group and BHP Billiton, increase output and spur a glut. Spot prices will average about $110 a tonne this year from the $119 forecast in December and $126 in 2013, the Canberra-based Bureau of Resources and Energy Economics said on Wednesday. Prices could average about $103 a tonne in 2015, it said in a report.

Iron ore fell into a bear market this month on speculation that slowing economic growth and credit concerns in China might curb the expansion in demand just as global supply increases. BHP and Rio Tinto predict lower prices after miners spent billions of dollars to boost output. Banks from Citigroup to Standard Chartered predict a surplus and Goldman Sachs Group listed iron ore among its least-preferred commodities for 2014.