Australia's iron ore miners are bracing for more pain as confidence in the sector plummets and prices plunge to fresh five-year lows.
The price of the steel-making commodity fell overnight to $US70.20 a tonne, its lowest level since May 2009 as the world's biggest iron ore miners continue to boost production despite an oversupply in China.
The drop in the iron ore price pushed the Australian dollar below 86 US cents, its lowest level since July 2010.
Shares in large scale iron ore producers and mid-tier miners came under renewed pressure on Thursday, with Fortescue Metals Group suffering some of the heaviest losses.
Shares in the world's fourth-largest iron ore producer fell to their lowest level in five-and-a-half years in morning trade.
The stock was eight cents, or 2.9 per cent, lower at $2.66 at 1513 AEDT after sinking as low as $2.57.
Chairman and major shareholder, Andrew Forrest, believes Fortescue can cope with the weakness and continue providing capital for his philanthropic work.
"Fortescue dividends will continue to support philanthropic endeavours across Australia and around the world," Mr Forrest told Fairfax Media on Wednesday.
Fortescue is eager to keep paying dividends despite achieving only $US71 a tonne for its iron ore during the September quarter, which was above its production costs.
Fat Prophets Resources analyst David Lennox said smaller players such as Atlas Iron, Arrium and Gindalbie would be concerned by the latest price falls and may consider job cuts to help lower costs.
"We could potentially see some action if it stays this way," he said.
"Markets are forecasting weak prices to persist."
Fortescue and BC Iron would need to address their costs, he said, while the bigger players of BHP Billiton and Rio Tinto were more comfortable.
Analysts will be looking closely to see if any iron ore miners have breached their debt covenants when they announce their next set of financial results.
IG Market analyst Stan Shamu said weakness across the iron ore sector was persisting.
"There hasn't been any confidence in these stocks for quite a while," Mr Shamu said.
He expects unpredictable price movements in the near term, but added that Fortescue was better positioned than some smaller Pilbara players.
The price of iron ore has fallen by more than 40 per cent this year.
