Australia, the world's largest iron ore exporter, cut its price estimates for this year and 2015, predicting that surging output will boost competition among low-cost shippers and force suppliers in China to close.

The raw material will average about $US105 a ton this year from $US110 forecast in March, the Canberra-based Bureau of Resources and Energy Economics said Wednesday. Prices may average about $US97 a ton in 2015 from $US103 estimated in March, it said.

Producers including BHP Billiton and Fortescue Metals Group are expanding supplies in Australia, betting that increased volumes from their low-cost mines will more than offset declining prices. Iron ore entered into a bear market in March and fell to the lowest since 2012 this month. The commodity faces a global surplus until at least 2016 that will pressure prices, according to Credit Suisse Group AG.

"Lower iron ore prices are unlikely to affect the production rates of most iron ore mines in the Pilbara, which have some of the lowest production costs in the world," the bureau said, referring to the main mining region in Australia. "At current prices a large proportion of China's domestic production is still assessed as loss-making."

Australia, the world's largest iron ore exporter, cut its price estimates for this year and 2015, predicting that surging output will boost competition among low-cost shippers and force suppliers in China to close.

The raw material will average about $US105 a ton this year from $US110 forecast in March, the Canberra-based Bureau of Resources and Energy Economics said Wednesday. Prices may average about $US97 a ton in 2015 from $US103 estimated in March, it said.

Producers including BHP Billiton and Fortescue Metals Group are expanding supplies in Australia, betting that increased volumes from their low-cost mines will more than offset declining prices. Iron ore entered into a bear market in March and fell to the lowest since 2012 this month. The commodity faces a global surplus until at least 2016 that will pressure prices, according to Credit Suisse Group AG.

"Lower iron ore prices are unlikely to affect the production rates of most iron ore mines in the Pilbara, which have some of the lowest production costs in the world," the bureau said, referring to the main mining region in Australia. "At current prices a large proportion of China's domestic production is still assessed as loss-making."