At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US67.90 a tonne, down 0.9 per cent from its previous close of $US68.50 a tonne, and just 3 per cent above the five-and-a-half-year low of $US65.70 reached on December 23.

The latest fall came despite data released yesterday showing Chinese iron ore imports jumped to an all-time high in December as a restocking took place ahead of winter.

Still, investors are fearful that Chinese demand cannot sustain such numbers, with any threats to Chinese growth considered a major risk to the iron ore price as major suppliers expand production despite an already oversupplied market.

Traders have also been nervous about a broader commodities sell-off that has been led by oil, which has touched near six-year lows this week. Copper, too, has been in the firing line, sinking to a fresh five-year low overnight.

Iron ore stocks regained some steam at the start of the year as the commodity staged a recovery of almost 10 per cent from its December trough, but once again fears of a dead cat bounce have surfaced, dragging iron ore miners like Atlas Iron, BC Iron and Fortescue Metals Group sharply lower on markets this week.

The latest price retreat had a minor impact on industry heavyweights Rio Tinto (RIO)and BHP Billiton (BHP) in London trade overnight, with stock in the two miners largely flat as the broader FTSE 100 index climbed 0.6 per cent.

The two local mining giants are still comfortably profitable at current prices as they maintain significant cost advantages over smaller rivals. However a new report suggests their cost advantage over principal rival Vale is quickly fading as lower oil prices bring the Brazilian company in sight of market leader Rio.

According to analysts at Sanford Bernstein, a shake-up in the race to be the lowest-cost producer has already taken place, with Vale possibly shipping iron ore to China for about $US6 a tonne cheaper than Australian exports.

“In the last few months we have seen the price for bunker fuel collapse in lock-step with the decline in the global oil price and with it a reordering of the cost position of the global iron ore industry has taken place,” Paul Gait, an analyst at Bernstein, said in a report, according to Bloomberg.

“In a world where freight is free and distance to market not an issue, then Brazil is actually at a significant competitive advantage over Australia.”

It follows a note from Macquarie Group analysts suggesting Vale was in touching distance of Rio’s costs after jumping past BHP for the first time in several years.