Goldman Sachs warned on Friday that benchmark iron ore prices could slump below $40 due to a growing supply surplus.
This came after benchmark prices declined below $50 on Thursday to the lowest level since February due to concerns that profits at Chinese mills are slumping. Prices remained at $49.90 per metric ton on Friday.
"Steel margins and prices could remain volatile in the near-term because inventory levels remain low. However, the window where a tight Chinese steel market acts as the main driver of iron ore prices is coming to a close," Goldman commodities analysts, Christian Lelong and Amber Cai, said in a report.
"We expect a growing surplus of seaborne supply to drive an increase in port inventories," they later added.