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The cost of iron ore in China has fallen to the lowest level since November after a report from Australia’s government forecast prices in the former could fall to $65 a tonne by the end of 2017.

The futures contract price for one tonne of iron ore on the Dalian Commodity Exchange dropped as much as 7.8 per cent to Rmb521 ($75.51) – the lowest level since November 9, according to pricing data from Wind Info.

That followed a new quarterly report from Australia’s Department of Industry, Innovation and Science predicting average prices in China would fall to $65 a tonne this year before ultimately declining further to $51, “weighed down by the combined impact of ongoing growth in low-cost supply and soft demand.”

It noted that while iron ore port stocks had reached the highest level on record in recent quarters, anecdotal evidence suggested that much of that was comprised of low-grade iron ore, whereas demand is currently highest for higher-grade ore.

But the department added, “the supply of high grade iron ore should increase and persistently high rising stocks will eventually place downward pressure on the price.”

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