It previously expected iron ore to average $US42 per tonne this year, but upgraded this year’s outlook to $50/t.

The Metal Bulletin 62% fines price has averaged $51.44/t so far this year.

Iron ore is now expected to average $51/t next year, up from $44.10/t, $53/t in 2018, up from $46.30/t, $54.60/t in 2019, up from $48.60/t, and $65/t in 2020, up from $51/t.

But the bank warned the price would still decline from current levels.

Iron ore closed at around $62/t overnight.

“Significant volumes of low-cost capacity are expected over the next 2-3 years, while high-cost capacity is being shut down,” World Bank said in its quarterly outlook.

“Further closure of high-cost capacity is required to balance the market.”

UBS warned this week that after a soft quarter of production for the majors and an increase in price, supply wasn’t likely to ease anytime soon.

“Channel checking for the first two weeks of April 2016 suggested FMG operating at an annualised rate of 190Mtpa, Rio at 335Mtpa, but BHP still lags at 220Mtpa,” UBS said.

“Looking ahead, with the iron ore price at over $70/dmt CFR, we expect additional supply to come into the market to drive the price down.

“While the restart of swing producers is ok, we believe the industry would prefer not to see additional infrastructure built that could see further fragmentation of the supply side. History has shown that a consolidated industry generates stronger returns than a fragmented industry.”

Meanwhile, World Bank expects metals prices to fall 8.2% this year, less than the 10.2% drop forecast in January, reflecting expectations of stronger demand growth by China.