Brutal. That's the first word to describe the massive 10.1 per cent fall in the iron ore price on Wednesday night, which took it to a fresh six-year low of $US44.59 a tonne.

Panicked. That's another word that seems to fit this incredible sell off. The free-falling Chinese sharemarket, which dropped 6 per cent on Wednesday even after the Chinese government tried to stop the selling, is clearly putting commodities traders in China on edge too.

Overreaction. That's another word that feels relevant here. A fall this big, coming after the price dropped 11 per cent in the previous two days, surely has more to do with the sharemarket than iron ore market fundamentals. The supply and demand dynamics may be weighing on the iron ore price, but not to this extent.

Contagion. Whether this is an overreaction or not, that's the word we need to be worried most about now. This Chinese sharemarket bubble has clearly popped, but the damage appears to be spilling into the real economy in China and beyond, with commodities prices acting as a sort of nexus.

How hard will Australia's iron ore miners be hit? That depends on whether this is a moment of craziness or some sort of new normal.

Right now it feels more like the former, but accepting for a moment that prices could remain below $US45 a tonne for an extended period – and there are plenty of experts who believe it can go even lower – the pain will be intense.

BHP Billiton and Rio Tinto have their breakeven prices (the point at which they are not losing or making money) down towards $US30 a tonne, so even at these low prices they are doing OK.

But outside this top tier of the iron ore pecking order, it will get ugly.

Certainly the tier two and three players have made big efforts in cutting their costs in recent months, even if there are some questions over whether those cuts are really sustainable.

Fortescue Metals Group is getting its breakeven down towards $US40 a tonne, so it won't want the price to fall much further.

Atlas Iron has a breakeven around $US50 a tonne, although company founder David Flanagan told shareholders last month that the company could now ride out iron ore prices as low as $US45 a tonne.

In May, UBS put the breakeven of BC Iron at $US52 a tonne, while struggling steel group Arrium, which also mines iron ore, has a breakeven of $US51 a tonne. 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.

These estimates were made with an assumption of the Australian dollar at US78c, so the miners will have received a bit of respite with the dollar falling towards US74c.

But the speed with which the iron ore price has fallen – around 25 per cent in a matter of weeks – has surely made life extremely difficult for the juniors.

Will Australian investors stick with these smaller miners on Thursday? More carnage could be on the way.