Citi has cut its 2015 iron ore price forecast from $US65 a tonne to just $US58 a tonne.
The price prediction came on the same day iron ore posted its sixth day straight of losses, closing at $US68.50.
Citi said the collapse in the price of oil was behind its downgraded forecast.
It said lower oil prices meant production costs would be cut at some mines, meaning the oversupply of iron ore in the global market will last longer than expected.
“The fall in prices has lowered the critical cost support for iron ore and this is likely to continue falling as producer currencies depreciate further versus the US dollar and local diesel prices continue to fall," Citi analyst Ivan Szpakowski said.
Earlier this week, former Morgan Stanley strategist Gerard Minack told Fairfax Media he expects the price of iron ore to drop to half of its current price.
“In the boom all the other commodities went up six- or sevenfold, while iron ore went up 15 times,” Minack said.
“So, sure, it’s halved already, but it has further to go.”
Some iron miners are cutting jobs and closing operations to deal with the price drop – which is 40 per cent lower than this time last year.