UPDATE 1-Australia cuts 2015 iron ore price forecast by 10 pct
* Australia cuts 2015 iron ore price forecast to $54.40 a tonne
* Cites weak outlook for main market China (Adds comment, detail)
SYDNEY, June 30 (Reuters) - Australia on Tuesday cut its price forecast for iron ore in 2015 by 10 percent to $54.40 a tonne, citing a weak outlook for the commodity's main market, China's steel sector.
The forecast by the Department of Industry and Science is a sharp decrease from the $60.40 a tonne predicted three months ago and is way off the $94 a tonne touted in January.
"China's steel production is forecast to contract in 2015 and 2016 as the seaborne supply of iron ore increases," the department said in its latest quarterly update. Iron ore is a key ingredient of steel.
Since the last forecast on March 17, iron ore has tumbled as low as $46.70 a tonne, standing at $60.40 a tonne this week. .IO62-CNI=SI
Australia & New Zealand Bank commodities analysts predict the price will fall to $53 over the next three months and stay under $60 a tonne in 2016.
That's more bullish than Citi, which expects iron ore to fall to $48 a tonne in the third quarter and as low as $38 in the fourth quarter.
Analysts blame the negative sentiment on a massive increase in production and over-estimates of China's appetite for imported ore by sector titans Vale of Brazil and Australians Rio Tinto and BHP Billiton which continue to expand.
The department also cut its forecast for total Australian iron ore exports by 4 percent to 733.2 million tonnes in fiscal 2014/15 and by 3 percent to 795 million tonnes in 2015/16. (Reporting by James Regan)
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