Goldman Sachs (GS) reported that iron ore prices have reached US$40/ton for a year forecast. However, Goldman Sachs plans to cut its iron ore forecast prices to US$38/ton in 2016, follows by US$35/ton for 2017 and 2018.

The main problem is that China's huge steel inventories, along with steel consumption continues to fall further, iron ore demand is likely to decline of 50%.

According to Goldman Sachs estimates, as China's market becomes more mature and the aging stock of steel, scrap supply up will make steel recycling increased from 11% to 47%. But Iron ore prices have fallen by more than 40% this year.