BHP Billiton's chief executive says he remains bearish about the iron ore price, more than any other commodity that the global miner deals in.
Speaking at a conference in Melbourne, Andrew Mackenzie said there's no shortage of iron ore and new supplies are being added all the time, which means growing supply will eventually exceed growth in demand.
"There is no doubt about it in the way the Chinese economy is evolving. Ultimately, we think the excess of supply will drive prices lower from where they are currently," he said.
"Directionally, I would say prepare for lower-for-longer."
Iron ore prices slid to a decade-low of around $US38 a tonne in December, amid a prolonged slump in most commodities prices as global supplies grew even as demand weakened in top resources buyer China.
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The iron ore price has bounced back, to around $US51 a tonne, but still remains nearly 70 per cent below its 2011 peak.
BHP, which along with rivals Rio Tinto and Fortescue has benefited from a decade-long mining boom in Australia, didn't expect the scale and speed of the downturn, Mr Mackenzie said.
The world's top miner in February posted a half year loss of $US5.7 billion and scrapped its progressive dividend policy.
However, return to price and demand normality in the commodity sector is not cause for long-term pessimism, Mr Mackenzie said.
CommBank on Wednesday said that while the downturn in commodity prices and mining capex is expected to continue, it estimates that prices have already fallen more than 90 per cent of the anticipated decline.
"We see some further downside to commodity prices. But we are near the bottom. On our forecast we are 92 per cent of the way through the decline from peak to trough in commodity prices," CommBank chief economist Michael Blythe said in a research note.
