Iron ore retreated to the lowest level in more than five years as a slowdown in China hurt the outlook for demand in the world's biggest user while the largest mining companies add to supply, boosting a surplus.

Ore with 62 per cent content delivered to Qingdao, China, tumbled 4.3 per cent to $US63.54 a dry metric ton, according to data by Metal Bulletin Ltd. That's the lowest price on record going back to May 2009, and was the biggest one-day fall since November 18. The commodity is 11 per cent lower this year.

The raw material has been in a bear market since March after Rio Tinto Group, BHP Billiton and Vale spent billions of dollars to boost low-cost output even as China slowed.

Goldman Sachs Group joined global banks on Friday in cutting price forecasts for 2015, predicting a return to a bull market is probably more than a decade away. The love affair between China and iron ore is cooling, the bank said.

The decline in prices is mainly due to "slower demand growth for steel in China, together with the expected new iron ore supply," Vanessa Lau, a Hong Kong-based analyst at Sanford C. Bernstein, said before the figure was released.

Steel mills in China are also cutting output before the Lunar New Year, putting further pressure on prices, she said, referring to the national holiday next month when industrial activity slows.

The commodity may average $US66 a ton this year from an earlier prediction of $US80, Goldman Sachs said in the January 23 report. The New York-based bank is at least the fifth lender this month to lower price estimates after Citigroup and UBS Group were among those cutting forecasts.

Gripped by a property downturn and excess capacity, China's economy expanded 7.4 per cent last year, the slowest pace since 1990, data on Tuesday showed. Crude-steel production rose 0.9 per cent in 2014 compared with 7.5 per cent the previous year, according to China's National Bureau of Statistics. That was the weakest growth in steel output in data going back 24 years.

The world's biggest miners are still expanding iron ore output, betting that higher-cost suppliers and including sites in China will be forced to close. BHP produced 56.4 million tons in the three months to December 31, 16 per cent more than a year earlier, the Melbourne-based company said on Wednesday. Rio plans to boost output to 330 million tons this year after an 11 per cent rise to 295 million tons in 2014.

The expansions will probably continue as the major producers are still mining at a profit, Goldman said. That will expand the global surplus from 47 million tons this year to 260 million tons by 2018, the bank estimated.

Shippers from Australia are gaining market share in China, accounting for 59 per cent of imports last year from 51 per cent in 2013, according to customs data on Friday. Brazil's share was 18 per cent from 19 per cent, while exports from the rest of the world fell to 23 per cent from 30 per cent.

Cliffs Natural Resources, the largest US producer, will stop paying a dividend as it tries to cut borrowings amid the slump in iron ore prices, according to a statement on Monday in the US. The elimination will give the Cleveland-based company $US92 million a year of extra free cash to pay down debt, it said.