The iron ore price has touched the bottom of a new trading range, but weakness in China’s steel market will keep prices subdued in the near-term, a new research note by ANZ says.

The bank says it has not materially changed its 2015 price outlook despite the recent volatility in iron ore prices.

“Rather, our price downgrades are for 2016 and 2017 on a prolonged period of weakness in China’s steel market.”

For 2016, ANZ downgraded its price forecast for iron ore to $US55 a tonne, from $US60 a tonne previously.

In 2017, prices are seen at $US60 a tonne, down from $US63 a tonne previously.

For the rest of 2015, prices are seen at $US56 a tonne, slightly below the previous forecast of $US57 a tonne.

The revision are due largely to predicted prolonged weakness in China’s steel market.

“The existing surplus housing stock and a tempered recovery in China’s housing price cycle will drag on China’s steel consumption,” the research note said.

“Over the next few years we forecast China’s steel consumption to fall from slowing property construction, which accounts for 40 per cent of all steel consumed in China.”

ANZ said it believes iron ore prices in the $US50 a tonne to $US60 a tonne range will be the “pain-point” range for high cost global supply to shut down and help rebalance an oversupplied market.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US60 a tonne, down 0.2 per cent from its prior close of $US60.10 a tonne.

The red session was just the third in the last 15 as a rally based on Chinese stimulus, rising oil prices, a softening US dollar and signs of supply cutbacks has driven the commodity almost 30 per cent above the 10-year low of $US46.70 a tonne reached last month.

“We view the early April low of $US47 a tonne for iron ore as the bottom of a new range that is being established,” ANZ said.