The seaborne iron ore market is poised for at least 4 years of expanding gluts as producers from Rio Tinto Group to Vale SA increase supply to a record just as growth in China drops to the slowest pace in a generation.

According to Goldman Sachs Group Inc, the surplus will reach 82 million tonnes in 2014, the most since at least 2008 and the glut will keep growing through 2017. Australia will account for about 66% of the supply gains next year. Iron ore will average AUD 115 per tonne in 2014, 14% less than now and the least since 2009.

Mr Christian Lelong an analyst at Goldman Sachs in Sydney said that “China is slowing down and steel production is going to be at a lower rate than what we’ve been used to. It’s a long-term trend that’s starting next year. On the demand side, it’s hard to see a return to the strong rates in the past.”

Mr Mark Pervan head of commodity research for Australia & New Zealand Banking Group Limited said that “The sentiment around China should start to warm around the start of 2014 and that should be reflected in a reasonably buoyant price. The market will underestimate Chinese demand, and I think the supply response won’t be as great as people expect.”