The meteoric rise of iron ore in the past decade, a basic commodity with no added value once it is unearthed, is starkly revealed when compared with the high-end technology sector.

In 2005, a shipload of iron ore sailing to China was worth the equivalent of 2200 flat screen televisions. Five years later, after a three-fold rise in iron ore prices and a fall in the cost of a TV, it was worth 22,000 TV screens.

And iron ore prices continued to climb.

Mark ups on iron ore for global miners BHP Billiton and Rio Tinto are now at a staggering 160 per cent, with profit margins at 62 per cent, nearly double that of the world's most valuable tech company, Apple Inc., as of June 30, 2013.

Understandably, miners have massively ramped up production.

But China's hunger for iron ore, the key ingredient for steelmaking, has started to wane as its maturing economy seeks to slim down its industrial capacity.

China currently imports about two-thirds of the world's iron ore and has an estimated excess steel capacity that would be enough to build about 3500 of New York's Empire State Building.

But with no other country coming close to being able to absorb the slack left by China, iron ore prices risk years of decline as a major oversupply swamps demand, with some forecasting prices to be cut in half by 2015.

"The boom years for iron ore have probably come to an end in line with the boom years for China," said Jeremy Platt, market analyst at UK steel consultancy MEPS.

A sustained slide in iron ore prices would hurt a legion of miners which have rushed in to meet the demand and could also trim billions of dollars of revenue for countries such as Australia, where iron ore is the biggest single export.

Iron ore prices jumped ten-fold in the decade to 2011, led by Chinese demand, to become the biggest money spinner for miners Vale, Rio Tinto and BHP Billiton, driving them to go all out on expansion plans.

But by the end of 2013, the three, along with Australia's Fortescue Metals Group, could be producing nearly 1 billion tonnes of iron ore - about 200 million tonnes more than China would buy if imports grew at the same pace as last year, according to Reuters calculations using global supply and demand data.

Iron ore is heavily reliant on China's growth, but in a slower economy its uses are more limited. Other metals also rely on Chinese demand, but, for example, copper has wider uses in anything from power transmission to computer chips.

China's crude steel consumption for every $US1000 ($1086) of GDP nearly halved to 80 kilograms in 2012 from 155 kilograms in 2005, according to Reuters calculations based on 2005 to 2012 consumption data. Its use of iron ore similarly fell to 120 kilograms from 236 kilograms in 2006.

And the trend is set to continue, as growth slows and policy makers try to steer the world's No.2 economy away from relying on investment in infrastructure to focus more on consumption.

"If Chinese demand growth really slows down, we don't see that there's much hope for growth outside of China," said Ian Roper, commodity strategist at CLSA in Shanghai, who forecasts iron ore prices to go as low as $US75 by 2015 - about half current levels - when the market is in "severe oversupply".

"We see the iron ore market as one that will go backward every year in the longer term."

IRON ORE USE DROPPING, BEIJING CLOSING MILLS

If China's GDP grows 7.5 per cent this year as officially forecast - which would be the slowest pace in 23 years - its iron ore consumption intensity will slip to 118 kilograms per $US1000 of GDP and crude steel usage to 78.8 kilograms.

And economic growth may ease further to 5 to 6 per cent by 2020, said Dominic Bryant, an economist at BNP Paribas, cutting iron ore and steel consumption further.

At 5 per cent GDP growth, steel consumption intensity would drop to 76.8 kilograms per $US1000 of GDP, while iron ore use will decline to 115.4 kilograms, the Reuters calculations show.

If China's new leadership manages to refocus the economy towards consumption, the share of investment in GDP could drop to 30 per cent this decade from about 45 per cent, said Bryant.

"The amount of steel per unit of GDP will also fall so your GDP becomes less steel intensive," he said, predicting steel consumption will flatten in 2015 and drop in the years to 2020.

Iron ore demand faces a further blow as Beijing becomes more serious about closing mills in bloated industries such as steel, meaning record steel production will be a thing of the past.

"Demand growth has slowed, market competition has intensified, environmental costs are rising and those enterprises that lack competitiveness are facing an increasingly serious battle for survival," said Jiang Feitao, policy researcher at the China Academy of Social Sciences.

SEABORNE IRON ORE CAPACITY RISING

In 2012, China's iron ore shipments rose 8.4 per cent to a record 743.5 million tonnes and similar growth would lift imports to just over 800 million tonnes this year.

China's imports could peak at between 800 and 850 million tonnes, said Li Xinchuang, deputy secretary general of the China Iron and Steel Association, which represents mills accounting for about 80 per cent of China's steel output.

Iron ore has been propped up by the appetite of China's huge steel sector, which analysts and industry officials estimate has excess capacity of around 200 million tonnes of steel a year.

BHP and Rio expect China's steel demand to peak at around 1 billion tonnes only towards 2030.

But last year, China's implied steel consumption already stood at 910 million tonnes, according to calculations based on Reuters data on output, imports and exports.

Meanwhile, seaborne iron ore supply is only getting bigger.

Rio Tinto is on track to boost its annual production capacity to 290 million tonnes by the end of the year, while BHP and Vale aim to be running at respective rates of more than 200 million tonnes and 300 million tonnes by then. Fortescue is on course to lift annual capacity to 155 million tonnes.

Rio aims to step up to 360 million tonnes by 2015, with Vale targeting 402 million tonnes of output by 2017, when it completes the expansion of its Carajas mine.

MINERS RISK GOING TO THE WALL

Iron ore rose from less than $US20 a tonne in 2000 to a record in 2011 near $US200, before levelling off.

In comparison, oil, the only traded commodity market larger than iron ore, rose only half as quickly when it hit an all-time high above $US147 a barrel in 2008 from about $30 in 2000.

Iron ore fell to a three-year low of $US86.70 last September as the Chinese economy lost momentum. They have since recovered to around $US130, but could average $US126 in 2013, a four-year low, according to a July 4 Reuters poll.

With production costs at between $US30-$US50 a tonne, big miners like Brazil's Vale, as well as Australian producers Rio and BHP, will still remain profitable even with far lower margins and it makes sense for them to produce more for less.

On the other hand, small miners and new entrants with costs nearer $US100 could go to the wall.

China's increasing use of scrap steel later this decade should also curb its demand for iron ore.

Between 2000 and 2011, annual scrap consumption in China rose by as much as 25 per cent to more than 120 million tonnes, according to data compiled by Macquarie.

And seaborne iron ore imports might only displace around 100 million tonnes of higher cost Chinese output, said CLSA's Roper.

Goldman Sachs, which sees iron ore at $US80 in 2015, said low prices would persist until about 200 million tonnes of seaborne supply had been forced out of the market.

INDIA NOT A CONTENDER

Looking outside China for new markets seems a tough ask.

The only real contender is India, comparable to China in terms of population and its potential for urbanisation, but with abundant ore reserves that could easily meet its needs.

Reserves were estimated at nearly 29 billion tonnes in 2010 with ore grades as high as 65 per cent versus China's average of only 15 per cent.

Outside Asia, Africa also has plenty of available iron ore led by South Africa which produces more than half of the continent's supply with reserves put at 9.3 billion tonnes.

The US Geological Survey said if major projects in the region were realised, countries on Africa's western coast could produce just under 10 per cent of the world's supply.

Without a new buyer, the iron ore market's outlook could deteriorate quickly.

"The people at the wrong end of the adjustment are the guys who benefited most and that's countries and companies exposed to the investment boom in China," said BNP Paribas' Bryant.

Reuters