Goldman Sachs says iron ore prices face extra pressure from China steel cuts

Melbourne

IRON ore prices that have been battered by global oversupply may face additional pressure as China's central government steps up efforts to cut back steel capacity in the world's top producer, according to Goldman Sachs Group Inc.

The State Council's plan to reduce the industry's capacity by 100 million to 150 million tonnes may result in actual steel output dropping by 55 million to 95 million tons, the bank said in an e-mailed report. That lost output represents 90 million to 150 million tons of iron ore, or as much as 15 per cent of the seaborne market, the bank estimated.