Iron ore is likely to extend its declines in 2015 as global supply exceeds demand and the world'slargest producers plan to add production, according to INTL FCStone Inc, which described lastyear's rout as incredible.

The ferrous sector remains chronically oversupplied and further weakness in iron ore prices isexpected over the year, analysts including Edward Meir and Spencer Johnson wrote in a reporton the outlook for commodities and currencies.

While there may be a climb of $5 to $7 a metric ton in the early part of 2015, there's no goodnews for bulls amid the glut, according to the report.

The raw material, which lost 47 percent last year as output by BHP Billiton Ltd and Rio TintoGroup expanded, opened 2015 with the biggest weekly gain in 18 months amid speculationChina will take steps to spur growth.

The country is accelerating 300 infrastructure projects this year as part of a broader 10 trillionyuan ($1.6 trillion) plan, according to industry sources. It's doubtful that additional stimulus inChina will be significant enough, said INTL FCStone.

"There is no good news ahead for the iron ore bulls," wrote Johnson. "Production rates are stillprojected to rise among the major three, offsetting declines from the higher-cost producers.Chinese demand is the usual wild card."

Ore with 62 percent content delivered to the port of Qingdao in eastern Shandong provincerallied 5.8 percent last week, the biggest gain since July 2013, and advanced to $71.49 a drymetric ton on Tuesday, the highest level since Dec 5, according to Metal Bulletin Ltd. Thebenchmark lost 0.7 percent to $70.96 on Wednesday.

Iron ore will average $79 a ton this year, according to Morgan Stanley, and analyst Tom Pricesaid last month that in terms of falling prices the worst is probably over.

Citigroup Inc has forecast, however, that it may plunge to less than $60 a ton this year as globalsupply increases and demand remains weak. Last year, the raw material averaged $96.97 asRio Tinto, BHP and Brazil's Vale SA expanded low-cost output.

"Despite the collapse in iron ore prices last year, the majors increased output to lower breakevencosts and squeeze marginal producers," wrote Meir. "In the case of steel, Chinese production ismoderating on a year-over-year basis, but steel mills are still cranking out too much metal,leaving many to look to the export market for relief."

Hurt by a housing slump and industrial overcapacity, China's economy is likely to have expandedin 2014 at the slowest pace in more than two decades, according to a Bloomberg survey. Thecentral bank cut interest rates in November for the first time since 2012 to boost growth in thesecond-largest economy.

Iron ore exports to China through Australia's Port Hedland, the world's biggest bulk-exportterminal, rose to 30.6 million tons last month from 29 million in November, according to port data.Brazil, the biggest exporter after Australia, shipped the most iron ore in December since 2005 asVale SA boosted output.

Inventories at Chinese ports declined for a sixth week to 100.6 million tons as of Jan 2, the lowestlevel in almost 11 months, according to Shanghai Steelhome Information Technology Co.