Iron ore stockpiles in China are getting thinner, getting close to a level which saw iron ore prices run to $US140 ($A201) per tonne.

According to new analysis from the Wall Street Journal, iron ore has been one of the best-performing commodities of the year — up 67 percent, to hit US$126.35.

In China, the raw material’s recent rally is particularly painful—so much so that the country’s steel companies have urged government officials to try to calm the market. 

Concern that China will step in to curb prices caused a more than 6 percent tumble on Friday, although the market bounced back to US$121.20 a ton by Wednesday.

The rise in prices is linked to shrinking or stagnating supplies from Brazil and Australia.

In the case of the former, the Vale disaster is still impacting volumes while weather events have stopped shipments from Port Hedland for the latter.

Meanwhile, steel production in China has been booming — up 10 percent in the first five months of 2019.

It’s led to low iron ore stockpiles at Chinese ports, down to roughly 115 million tonnes, which is less than four weeks of cover.

That has worried traders, given it takes a number of weeks for shipments to arrive from Australia or Brazil.

“The last time we got to 3 weeks of cover, iron-ore prices ran to $140 a ton,” Citigroup said in a recent client note according to the newswire.

Should the stockpile situation get worse, it could cause the iron ore price to go even higher.

This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.