Iron ore prices fell below $US60 a dry ton for the first time in five weeks as exports from Australia are set to gain speed next year with the expansion of a new mine backed by billionaire Gina Rinehart.

Shipments from the world's top exporter will rise 10 per cent to 824 million metric tons in 2016, following a 4.3 per cent increase this year, Australia's Department of Industry and Science said in a quarterly outlook on Tuesday. The forecast for the average price of iron ore this year was cut to $54 a ton from about $US60 forecast in March, the department said. The 2016 forecast was reduced to $US52 from $US57.

Rising exports may hurt the outlook for prices, which on Tuesday capped the first quarterly rise since the final three months of 2013. The Rinehart-backed Roy Hill mine in the ore-rich Pilbara plans to deliver its inaugural cargoes at about the end of September, adding to increased output from Rio Tinto Group and BHP Billiton. Goldman Sachs Group and JPMorgan Chase & Co are among banks predicting that iron ore's recent rally won't last.

"Supply is expected to grow in Australia as Roy Hill comes into production and Rio and BHP further debottleneck their operations," Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group, said by email. "This is likely to continue to weigh on iron ore prices."

Ore with 62 per cent content delivered to Qingdao, which bottomed at $US47.08 a dry ton on April 2, tumbled 3.2 per cent to $US59.35 on Tuesday, according to Metal Bulletin Ltd. That's the lowest level since May 21. The benchmark jumped 16 per cent this quarter after a 28 per cent loss between January and March. The department's price forecasts refer to spot ore free-on-board Australia.

Global trade in ore will climb to 1.42 billion tons in 2016, from 1.37 billion tons this year, according to the report. Brazil's exports are set to jump to 412 million tons next year from 390 million tons in 2015, it said. Australia and Brazil's combined share will account for 87 per cent of worldwide seaborne trade next year, up from 83 per cent in 2015, it said.

Roy Hill, Australia's largest single iron ore mine, will add 55 million tons of output a year when running at full capacity. Rinehart said in April that while iron ore could be low for some time, prices wouldn't stay down forever.

Slowing steel production in China is also driving iron prices lower, the report said, adding the country's output will contract this year and next. Domestic consumption has been hurt this year by the lacklustre performance in residential construction, while low capacity utilisation and tighter environmental standards have also curbed output, it said.

"A period of subdued prices is unlikely to significantly impact the major Pilbara producers, including Roy Hill," the report said. "The Pilbara producers are expected to continue improving productivity and cutting costs."

Rio Tinto shares fell 2.9 per cent to 2614 pence at the close in London on Tuesday, the biggest one-day drop since March 5, while BHP slid 4 per cent in London.