The drop caps a fifth consecutive week of losses for the commodity, which has slumped 60 per cent in the past year.

Although demand in China has weakened, BHP Billiton, Rio Tinto and Vale — the big three iron ore miners — are pushing ahead with plans to increase production.

They are looking to take market share, betting their low-cost supply will displace high-cost producers in China and elsewhere.

An additional 100m tonnes of seaborne is expected hit the market this year, which Rio expects to be offset by 20m tonnes of demand growth and 80m tonnes of capacity going offline, mainly in China.

However, many analysts are sceptical. Chinese producers have proved difficult to dislodge from the marketplace since decisions to shut state-owned mines taken into account factors other than economics.

About three-quarters of Chinese iron ore mines are in the red, according to remarks on Friday by Yang Jiasheng, chairman of the Metallurgical Mines Association of China.

While many smaller, private iron ore miners may be willing to sell or at least mothball production, state-owned mines are locked into contracts with mills and will keep digging. Local governments also generally oppose closures that might raise local unemployment rolls.

State-owned metals trader Minmetals, for example, has been unable to get permission to close a costly mine in northern China, in spite of the availability of cheaper imported ore. “Many of the iron ore mines have signed contracts with steel factories,” said Wang Min, analyst at Lange Steel Information Research Center in Beijing. “Many are still operating because they want to make sure they have stable supplies for steel factories.”

Shi Zhenglei, iron ore analyst at Mysteel, reckons that about half of China’s estimated 1,500 iron mines will be forced to close this year. However, this will only remove 20 to 30 per cent of national capacity. Many Chinese mines produce low grades of ore.

“Some miners will sell out but the problem is that it will be hard to find buyers,” he said. “It is also difficult for state-owned companies to acquire small mines due to reasons pertaining to capital and local government.”

The drop in prices has also hit higher-cost international miners including Australia’s Fortescue Metals Group, once hailed by the Chinese for its potential to break the market dominance of BHP Billiton and Rio. Andrew “Twiggy” Forrest, Fortescue founder and chairman, this week called for a cap to help revive prices.

China’s flagship steel producer Baosteel has joined Rio Tinto in rejecting that suggestion. In a recent report, Citi said the price of iron ore could fall below $50 a tonne because Chinese supplies were proving resilient.

While mine supply has fallen since the start of the year, the bank said further cutbacks would be difficult given the “concentration of remaining production among SOE steel mills and in geographically advantageous locations (near mills and away from ports)”.