Jackie Przybylowski of Desjardins Capital Markets says the price is hurting the ability of companies to obtain funding to get projects moving.
Weaker demand caused by a slowdown of the Chinese economy pushed iron price down to about US$78 per tonne on Monday, the lowest level since September 2009.
Steel and iron ore futures in China also fell to their lowest ever, ahead of a week-long national holiday that starts Wednesday.
Przybylowski says she expects prices will remain flat or even dip a little further until the Chinese resume purchases after the holiday.
However, the analyst is optimistic for the longer term and expects prices will recover to about US$100 by mid-winter.
The low price is especially challenging for companies that don't have agreements in place with strategic partners or high-cost ore producers.
Labrador Iron Mines Holdings (TSX:LIM) suspended all operations at its mines for the year in July, which a year ago supported as many as 370 jobs.
The analyst also says the low price could also hurt the Quebec government's attempt to kick start a new railway in the Labrador Trough, a component of the Liberal government's northern development plan.