Fortescue Metals' chief executive says the cost of iron ore will stay low until high cost producers leave the market, and that was happening more slowly than expected.
Fortescue achieved only $US71 a tonne during the September quarter as the iron ore price plunged to five year lows in an oversupplied market.
The company's shares slumped by 22 cents, or six per cent, to $3.42.
That is still above its production costs so it is still profitable but will make it harder for the Pilbara miner to repay debt.
The average price of iron ore during the quarter was $US90 but the quality of Fortescue's product is below that used for the benchmark price.
"I think the market price will stay low as long as it takes for some of the high cost production to exit the market and the supply-demand balance is restored," chief executive Nev Power told reporters.
He insisted it was starting to happen but it was more slowly than expected because high cost producers had stopped operating during slowdowns in 2008 and 2012.
The low prices would also stop new operators getting their mines in Australia on board, he said.
Despite the price volatility, Mr Power said he was not concerned about Fortescue's prospects and was still confident in the long term demand out of China and the wider Asian market.
The Pilbara miner has maintained its production and costs forecasts for the 2014/15 financial year.
Fortescue shipped 41.5 million tonnes of iron ore in the three months to September, up seven per cent from the preceding three months.
Its costs dropped six per cent to $US32 per metric tonne.
The miner has forecast production of between 155 and 160 million tonnes in 2014/15, and an operating cost of $US31 to $US32 per tonne.
Fortescue said falls in iron ore prices in the September quarter impacted revenue, but demand remained robust.
"Fortescue continues to see strong demand for its ores, reflecting the value of its high quality low impurity products," it said.
The company had net debt of $US6.9 billion at September 30, compared to a peak of $US11.3 billion in March 2013.
It needs to pay another $US2-$US2.5 billion to get to a desired 40 per cent gearing rate.
