The price of iron ore has held steady in offshore trade amid a grim forecast for the commodity from a leading player in the Chinese steel industry.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US47.70 a tonne, in line with its prior close.
The commodity's price has been aided this week by expectations of a temporary dip in supply owing to a tragic dam burst at a mine owned by Vale and BHP Billiton in Brazil. The disaster will likely trim global output through the remainder of the year, with Citi suggesting it could be enough to keep prices around $US50 a tonne into 2016.
However, weak Chinese data continues to haunt the commodity, with this week's gains capped by soft trade and inflation data out of Beijing. In both cases the numbers falling shy of market expectations, with investors hoping for signs of improvement as a number of key economic readings are released today.
Among them is industrial production, which could be crucial to the price direction of iron ore for the remainder of the week.
The action comes as steel production forecasts from BHP Billiton and Rio Tinto continue to face scrutiny, with one of the most powerful players in China's steel sector suggesting they look overly optimistic.
Shen Wenrong, chairman of steel giant Shagang and deputy chair of the China Iron and Steel Association, said the chances of China producing more than one billion tonnes of steel within the next five to 10 years are remote.
“It is impossible for China’s steel production to exceed 1 billion tonnes,” he told The Australian.
“OK, let me rephrase, I should not be so categorical. I think the chance that China’s steel production will exceed 1 billion tonnes within the next five to 10 years is 1 per cent.”
Mr Shen expects steel production to actually start to fall in coming years, dragging iron ore prices lower in the process.
“In fact, [the price] is still elevated. I think the price will fall into the range of $US40-$US45,” he said.
“That is a more reasonable price and it will remain so for a long period of time.”