Iron ore is likely to extend its declines in 2015 as global supply exceeds demand and the world's largest producers plan to add production, according to INTL FCStone Inc, which described last year's rout as incredible.

The ferrous sector remains chronically oversupplied and further weakness in iron ore prices is expected over the year, analysts including Edward Meir and Spencer Johnson wrote in a report on the outlook for commodities and currencies.

While there may be a climb of $5 to $7 a metric ton in the early part of 2015, there's no good news for bulls amid the glut, according to the report.

The raw material, which lost 47 percent last year as output by BHP Billiton Ltd and Rio Tinto Group expanded, opened 2015 with the biggest weekly gain in 18 months amid speculation China will take steps to spur growth.

The country is accelerating 300 infrastructure projects this year as part of a broader 10 trillion yuan ($1.6 trillion) plan, according to industry sources. It's doubtful that additional stimulus in China will be significant enough, said INTL FCStone.

"There is no good news ahead for the iron ore bulls," wrote Johnson. "Production rates are still projected to rise among the major three, offsetting declines from the higher-cost producers. Chinese demand is the usual wild card."

Ore with 62 percent content delivered to the port of Qingdao in eastern Shandong province rallied 5.8 percent last week, the biggest gain since July 2013, and advanced to $71.49 a dry metric ton on Tuesday, the highest level since Dec 5, according to Metal Bulletin Ltd. The benchmark lost 0.7 percent to $70.96 on Wednesday.

Iron ore will average $79 a ton this year, according to Morgan Stanley, and analyst Tom Price said last month that in terms of falling prices the worst is probably over.

Citigroup Inc has forecast, however, that it may plunge to less than $60 a ton this year as global supply increases and demand remains weak. Last year, the raw material averaged $96.97 as Rio Tinto, BHP and Brazil's Vale SA expanded low-cost output.