Iron ore will extend declines in 2016 on rising low-cost supplies from the world's largest miners, weak demand growth in China and a stronger greenback, according to BMI Research, while Goldman Sachs Group repeated a forecast for lower prices.

Prices will trade between $US50 and $US60 a metric ton over the remainder of this year, then drop to a range of $US45 and $US55 in 2016, BMI said in a report emailed Monday. Ore with 62 per cent content delivered to Qingdao rose 1.1 per cent on Monday to $US56.61 a dry ton, according to Metal Bulletin Ltd.

Iron ore has dropped 21 per cent this year as Rio Tinto Group and BHP Billiton in Australia and Brazil's Vale boosted low-cost supplies to increase market share even as demand growth stalled in China. Steel consumption in China was seen shrinking by an average of 1.3 per cent annually between this year and 2019, BMI said.

"Global iron ore majors will continue to ramp up production to squeeze out higher-cost competitors," BMI said. "BHP Billiton, Rio Tinto and Vale all reported record output in 2014 and will increase output further in the quarters ahead."

Supply additions by the four largest producers have overwhelmed output cuts elsewhere, according to Morgan Stanley. There's also the prospect of the first cargoes from billionaire Gina Rinehart's new Roy Hill mine, which is set to start shipments this month, the bank said in a report on Monday.

Demand for seaborne iron ore will probably peak next year, while mining capacity continues to rise, Goldman said on Monday, citing higher productivity at existing mines as well as new projects such as Roy Hill. The bank repeated forecasts for prices to drop to $US44 next year and $US40 in 2017.

Rio Tinto and Fortescue Metals Group are set to deliver quarterly operations figures this week. Fortescue, which raised shipments from 28 million tons in 2009 to 165 million tons in the year to June 30, has said it plans to maintain cargoes at the current level amid weaker prices.

Fortescue climbed 5.3 per cent to $2.40 in Sydney, the highest close since June 15, amid speculation that commodities prices may be bottoming. In London, Rio stock was 0.4 per cent lower after gaining 16 per cent last week.

Beyond 2016, more Chinese ore production is expected to come offline, reducing the global oversupply and preventing a further weakening of prices, BMI said. Chinese steel production won't collapse as provincial governments seek to maintain employment levels and export growth continues, it said.