Iron Ore Price Forecast Cut by Morgan Stanley on Supply

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Morgan Stanley reduced its iron ore price estimate for this year and predicted a further drop in 2015 as the seaborne surplus grew faster than expected and the level of cost support at Chinese producers declined. The rate slumped to the lowest since September 2012 today.

Prices will average $105 a ton this year from $118 forecast in May and $135 in 2013, analysts Joel Crane and Rachel Zhang wrote in a report today. Prices may average about $90 a ton in 2015, a drop of 21 percent from an earlier estimate, they wrote.