Bloomberg reported that Goldman Sachs Group Inc’s analysts Christian Lelong and Amber Cai wrote in a report today titled “The end of the Iron Age” wrote that “This year is the inflection point where new production capacity finally catches up with demand growth, and profit margins begin their reversion to the historical mean/”

According to the New York based bank, which stuck with a forecast for USD 80 next year “The 2016 forecast for seaborne ore was cut to USD 79 a tonne from USD 82 and the 2017 outlook was reduced to USD 78 from USD 85.”

According to Goldman, the decline in prices came sooner than expected,

Lelong and Cai wrote “The price decline has been dramatic, but a weak demand outlook in China and the structural nature of the surplus make a recovery unlikely. Lower prices for iron ore and steel are unlikely to boost demand in a material way. Instead, the day when steel production in China will peak gets ever closer.”

They wrote “Before the surplus emerged, iron ore supplies were tight and producers had above trend profits even as costs increased. That period, the Iron Age, is now ending.”

They said “The current exploitation phase in iron ore could last for a decade. Iron ore markets went through a 20 year period of declining prices in real terms during the previous exploitation phase that ended in 2004.”

According to Goldman “The global surplus will more than triple to 163 million tonnes in 2015 from 52 million tonnes this year. The glut was seen expanding to 245 million tons in 2016 295 million tonnes in 2017 and 334 million tonnes in 2018.”

Goldman estimated in the report “About 110 million tonnes of global supply will close next year and a further 75 million tonnes in 2016. While the majority of closures would be in China, seaborne producers will not go unscathed.”

They added “The shift into structural oversupply is barely six months old but seaborne prices have already declined 38 percent year to date. Rather than representing the trough for this cycle, we believe the downward pressure is set to continue.”