Corresponding to Goldman Sachs’ previous predication, iron ore prices will present a big drop in 2014 due to the structural surplus of iron ore supply coming into the market. As for iron ore market in 2015-2016, the analysts from Goldman Sachs think that the problem of oversupply will still be very severe. It is predicated that supply surpluses of iron ore digested by 2015’s market will more than double this year’s surpluses.

In terms of the demand for iron ore, Goldman Sachs noted that it is very unlikely that the demand will be sharply increased by China’s economic stimulus.

The growth of Chinese steel output in 2015-2016 is expected to be 2%, according to Goldman Sachs’projections, and it is believed that Chinese economy will entirely give up the investment-oriented growth pattern, so the possibility to increasing demand by stimulus spending will be very low.

In 2015, the iron ore market is expected to absorb 110 million tons of surpluses, and this number is almost twice as the 2014’s 60 million surpluses. There are two alternatives for the market to absorb supply surplus: one is shutting down mines; the other is accumulating stocks in China’s ports.