Significant cost reductions made over the past nine months may not be enough to buffer Australia's smaller iron ore producers from further deterioration in the iron ore price.

Despite impressive cost-cutting efforts, most of the local sector's junior and mid-tier iron ore miners are again marginal at current prices after a renewed price slide.

Snatching back much of a recent recovery, iron ore crashed spectacularly last week, recording its biggest weekly loss since April and capping the week at $US55.26 a tonne on Friday.

Cash break-even price analysis by UBS suggests BC Iron is the most at risk local producer but only by a small margin, with just $US4 a tonne separating the rest of the junior ranks.

UBS believes BC Iron could generate cash so long as the benchmark iron ore price remained above $US52 a tonne. Arrium's break-even price is pegged at $US51 a tonne, while Atlas Iron is expected to be cash break-even at $US50 a tonne after a lowering its break-even price from $US62 a tonne in early April through a profit-sharing arrangement with its contractors.

The price slide could not come at a worse time for Atlas, which is working to attract investor support for its $180 million equity raising plan.

Mount Gibson Iron's break-even price is estimated to be around $US49 a tonne, with Grange Resources' pegged at $US48 a tonne. Gina Rinehart's Roy Hill, which expects to ship its first ore in September, has an assumed break-even price of $US41 a tonne, lower than Fortescue Metals Group at $US44 a tonne.

The analysis, which includes interest charges, was published in late-May and based on the Australian dollar trading at US78¢.

RENEWED SPOTLIGHT

Many analysts tip the price to fall back to, and in some cases beyond, an April low of $US47 a tonne, shining a renewed spotlight on the fate of the sector's junior ranks.

The UBS analysis compared the current estimated break-even prices to estimates for the same producers from September 2014, highlighting the considerable cost reductions the miners implemented to stay in the black at lower prices.

UBS analyst Glyn Lawcock said Australian junior producers had done "an impressive job" lowering operating costs more than 20 per cent since late 2014.

On a global level, Mr Lawcock said the iron ore producers UBS covered managed to lower their "break-even" costs by $US20 to $US30 a tonne in the eight months to the end of May. However, he noted about $US10 a tonne of those savings had come from external factors such as lower energy prices and foreign exchange rates.

"For the next 12 months we think the [Australian] miners will work hard to bring their costs down," Mr Lawcock told Fairfax Media.

However, Mr Lawcock said whether those reductions proved sustainable longer term remained to be seen.

Wood Mackenzie analyst Andrew Hodge said it is expected "many of the mid-tiers will be under continued pressure from not just costs and prices, but the depletion of their mines within the next two years".

Wood Mackenzie forecasts iron ore to average $US58 a tonne for the remainder for the year.

"Even if producers are able to weather prices falling into the low $US50s for a prolonged period, which we don't forecast, surviving beyond the next two years for many of them is unlikely based on their current reserves," Mr Hodge said.

"But for those that will remain, we don't believe that the pull-back on strip ratios is sustainable and producers will be forced to either cut production, cut reserves or ramp back up more sustainable strip ratios and therefore increase costs."

PRICE FORECASTS

The Federal Department of Industry and Science last week cut its price forecast for iron ore in 2015 by 10 per cent to $US54.40 a tonne, expecting the price to average $US52.10 in 2016.

In a recent note to clients, RBC Capital Markets analysts lead by Chris Drew said as much as 40 million tonnes of Australian iron ore supply was at risk of closure.

"Several producers, including Mt Gibson and BC Iron, have indicated that they would consider options if price weakness persisted, Arrium has already demonstrated willingness to adjust production while Cliffs seems keen to leave Australia," RBC said.

"We think that there is a maximum of 40 million tonnes of production which could be closed if prices persisted at low levels. If prices fell below $US50 a tonne for a sustained period we would also expect to see Atlas reconsider its operation as well potentially removing a further 14 million tonnes per annum of supply."

Citi is forecasting iron ore to fall to $US48 a tonne in the third quarter and $US38 in the fourth quarter, while Goldman Sachs said it expects the iron ore price to fall below $US50 a tonne over the medium term.