More iron ore mines will shut before the end of 2015, according to the analysts at Citi, who believe the closures announced by Arrium Limited last week are just the beginning.

Arrium's decision to mothball about 40 per cent of its iron ore production in South Australia preceded yet another fall in the benchmark iron ore price this week, which at $US63.54 a tonne is now fetching the lowest prices seen since the benchmark index was created in May 2009.

After falling more than 40 per cent in 2014, iron ore prices have now fallen a further 11 per cent over the past three weeks, and the continuing slide prompted more selling of shares in Fortescue Metals Group, BHP Billiton, Rio Tinto and BC Iron on Tuesday.

Citi's China-based analyst Ivan Szpakowski said iron ore had been caught-up in a broader sell-down of commodities (including others like copper) this week, but the longer-term issues of oversupply and weaker demand in China would see iron ore prices average just $US58 a tonne in 2015.

That prediction is well below the $US96.98 a tonne that iron ore averaged in 2014, and Mr Szpakowski said many iron ore miners would be loss-making at such prices.

"We are forecasting pretty significant cutbacks both in terms of Chinese domestic mines and in [international] export supply and at the prices we are forecasting there is a large swath of the export market that we think will be cash negative," he said.

"You have already started to see growing amounts of closures ... the most recent one being Arrium closing their production. So you are seeing it already start to develop and by the time you get through this year you will have seen a pretty significant amount curtailed."

But 2015 could be as bad as it gets for the iron ore industry, with Citi predicting average iron ore prices of $US62 a tonne in 2016 and higher again in 2017 as mine closures start to create a shortage of product once more.

The sliding Australian dollar is also offsetting some of the damage from the iron ore price declines, with the Australian-denominated iron ore price hardly changing since shortly before Christmas, despite the regular declines in the US dollar denominated benchmark price.

But the falls in iron ore and oil prices have already wreaked havoc on the federal budget, which is now expected to boast a deficit of $40.4 billion for the 2015 financial year.

Australia's bureau of resources and energy economics had originally expected the value of Australian iron ore exports in the 2015 financial year to be marginally better than 2014 at just under $80 billion, but has since revised that prediction, and now believes the value of iron ore exports will fall by 24 per cent year on year to $57 billion.

But the pessimistic outlook and mine closures have not been enough to scare away the long queue of aspirants still hoping to join the Australian iron ore export industry.

One such company, Rutila Resources, lodged applications with the federal government on Tuesday for permission to push ahead with its plan to build 200 kilometres worth of railways and conveyer belts in the pilbara.

The works are part of Rutila's plan to build a new transhipping iron ore port 120 kilometres south-west of Port Hedland, and use it to export its iron ore and that of joint venture partner Flinders Mines.

Neither companies have exported iron ore before, and Rutila executive chairman recently said he believed the project could go ahead despite the soft iron ore prices.

"We recognise that in the current iron ore pricing environment the development of greenfield iron ore projects is challenging, however given the robust economics of this project, notably the low capital intensity, we are confident the project will generate sufficient returns to allow the development of the project," he said on December 30.