Iron ore prices will probably rebound later this year but the longer-term forecast was for a spot price at around the current levels that have caused anguish among the big miners.
UBS analyst Tom Price said the spot iron ore would return to $US120 ($A117.84) a tonne by November or December as Chinese steel mills sought to increase inventories by the northern winter.
However, UBS forecast a long-term price of $US85-90 a tonne with a peak in Chinese steel production to occur in 2015.
This is a far cry from the record levels of $US180 ($A174.70) a tonne in the first half of calendar 2011.
The profitability of pure-play iron ore miners, including Fortescue Metals, has been threatened with iron ore spot prices having plunged 25 per cent in recent times to below what many analysts had thought was a floor of $US120 ($A117.84) a tonne.
BHP Billiton and Rio Tino have produced forecasts that China's steel production would expanded to more than one billion tonnes.
But current production is only about 700 million tonnes with confidence low in the Chinese steel market, amid concerns worldwide about a slowdown in the Asian economic powerhouse.
"Our highest figure was 800 million-850 million tonnes ... I just think they were too optimistic," Mr Price said.
Australia's iron ore miners have been re-evaluating expansion plans amid concerns that the peak of the mining boom may have passed.
Mr Price said there was reason for optimism as spot prices had fallen so far as to make it cheaper for China to import than to mine its own iron ore.
"That supports the case for imports to lift and prices to lift over the next couple of months," he said.
Mr Price said UBS's top commodity pick was copper.
China was pumping out huge amounts of semi-manufactured copper materials, including wire, and an uplift in the US housing market would also support prices.
A lack of supply would also support prices.
Among the gold sector, Australian miners were failing in delivering on production and costs, said fellow UBS analyst Jo Battershill.
Since 2007, the gold price had doubled but cash margins were flat, he said.
"That tells me the industry is not in great shape domestically."
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