The spectacular collapse in the iron ore market could see a four appear in front of the price in a matter of weeks but those hoping that will push majors Rio Tinto and BHP Billiton to review their aggressive expansion strategies are set to be disappointed. 

Both miners have made it clear their strategy is to run their assets hard and sell as much ore as possible for as long as they remain cash positive.

The iron ore price would have to crash another 40 per cent to about $US30 a tonne before the two miners - the lowest-cost exporters of iron ore in the world - were on the edge of losses. 

Iron ore started the year at $US68 after losing half its value in 2014, but the fallout has accelerated with a fresh record low of almost $US51 a tonne hit on Wednesday. 

The question has changed quickly from whether the price would have a five in front of it in 2015 to whether the price start would start with a four.

A flood of new supply from the majors - BHP, Rio, Brazil's Vale and Fortescue Metals Group - and stalling Chinese steel demand growth have together crushed the price.

Despite the cries of protest from Fortescue, which is the highest cost producer of the majors, as well as smaller industry players, and the state and federal governments whose budgets have been smashed by the price collapse, Rio and BHP are sticking firmly to their expansion targets. 

UBS mining analyst Glyn Lawcock said the iron ore price could soon fall into the $US40s but that would not push Rio and BHP to review their strategies. 

"Having a four in front of the price is not far away and is entirely possible given what we've seen in the past few days," Mr Lawcock told Fairfax Media.

"There is a price at which they (BHP and Rio) would consider the volumes they are pushing into the market, but that price is considerably lower than where we are today."

"BHP and Rio are not bleeding until you get down to around $US30, or below that if you remove the interest component and just look at their all-in, delivered cost to China.

David Fuller's view

I have held BHP and Rio in my personal long-term investment portfolio for many years, and have often added to these positions on weakness, by reinvesting their dividends. 

However, I have been less willing to do this over the last year or so, possibly because the future of even the best mining companies, cyclical as it has always been, may no longer be as attractive as it once was.  Substitution rather than available supplies is likely to be a significant problem over the longer term, in my opinion.  For instance, graphene could theoretically reduce the demand for metals, although this is far from a near-term prospect. 

Also, this is an era of accelerated technological innovation, as I have often said.  Consequently, I would prefer to diversify into more tech industries such as robotics, which I am now doing once again with Fanuc. 

Meanwhile, I am hoping that BHP and Rio are able to maintain their current dividends, despite astonishingly low prices for iron ore and many other metals, albeit priced in strong USD, because leading miners are major beneficiaries of the tech industry.  

Historically, miners have always been late performers in maturing bull market cycles, which have coincided with strong global GDP growth.  Obviously, that moment has yet to arrive, but when it does, I will almost certainly lighten my exposure to miners. 

(See also: Iron ore low won’t stop Citic’s Australian ‘disaster’.)