20 Feb 2014 Last updated at 02:05:51 GMT

SYDNEY (Scrap Monster): The Anglo-Australian multinational mining and petroleum company BHP Billiton forecasts the seaborne iron ore supply to rise by 100m tonnes in 2014, thus leading to surplus. The firm also sees the global iron ore demand to go up by 60m tonnes during the year. The projections were made by Mike Henry, Head of Marketing, BHP while addressing a press conference.

Mr Henry pointed out that the supply will be flooded with lot of new supply from mines in Australia that are expected to come on stream during the second half of the year. Also, he predicts some support in prices during the first half of 2014 coming from accelerated steel demand from China. But supply will outweigh the demand of iron ore towards the end of the year.

Last week, Sam Walsh, Chief Executive, Rio Tinto too forecast a surplus of nearly 90m tonne for seaborne iron ore during the year.

Further, many analysts hold the view that the rising seaborne supply may finally overwhelm the pace of Chinese demand growth. This will eventually lead the iron ore market from a balanced one in 2013 to surplus in 2014. The surplus situation may send the prices sharply lower. According to UBS estimates, increased iron ore supply from companies such as BHP, Rio Tinto and Vale could easily leadf the seaborne market to a surplus of 94m tonnes this year.

On the other hand, BHP Billiton maintained positive outlook for copper. The company forecasts 1m tonnes deficit for refined copper market.

Author: Paul Ploumis