Mining and steel group Arrium lost approximately $8.90 per tonne of iron ore it sold last quarter as the rapid collapse in prices for the steel making raw material hit margins.

Arrium's quarterly mining report, released on Monday, indicates that the company's total cash cost per tonne of ore for the three months ended March 31 was $66.90, but the group's average realised sales price was just $58 a tonne.

"Bearish sentiment to Chinese steel production and concerns regarding increased supply from the majors [BHP Billiton and Rio Tinto] has weighed heavily on iron ore markets," Arrium said.

"The sustained decline in pricing has forced producers to rapidly reduce costs with many high cost producers being displaced from the market."

The company mined and exported 3.06 million tonnes of iron ore during the quarter, down from 3.29 million tonnes in the December quarter.

Based on Arrium's disclosed cash costs, sales prices and tonnes shipped, the company appears to have lost around $27 million in its mining arm during the quarter.​

During the quarter the benchmark iron ore price averaged $US62 a tonne, a $US12 drop on the previous quarter.

The price is currently around $US50 a tonne.

The ore that Arrium mines at its operations in South Australia is lower grade than the benchmark and therefore attracts a discount to the benchmark price.

In US dollar terms, Arrium's average realised price during the quarter was just $US46 a tonne, down from $US64 a tonne.

However the company, which has launched a major overhaul of its mining business in a bid to cut costs, said it expects its discount to benchmark will narrow going forward.

Arrium said it is working to identify "volume/grade/cost options to optimise the Middleback Ranges operations in the current price environment".