The Metal Bulletin 62% iron ore fines price reached $US62.03 per tonne overnight, the second-highest price since April.

But BHP CEO Andrew Mackenzie says the recent strength will not last and there was more downside than upside.

“Our views have not changed and we think it's a temporary effect,” he told reporters on a teleconference yesterday.

Mackenzie noted the increases in supply to come from the ongoing ramp-up of the Roy Hill mine, as well as the Vale’s near-complete S11D project in Brazil.

“There will not be an increase in demand to offset that,” he said.

Analysts have mixed views on the outlook for iron ore.

Morgan Stanley sees “seasonal and structural weakness” ahead and expects the price to fall to just $35/t in the December quarter.

ANZ Research said last week that the likely closure of high-cost steel mills in China should keep steel prices high, which could be supported by a pick-up in steel demand due to the need for repairs after flooding in the north of the country.

“This comes at a time when steel inventories and smelting margins are low,” it said.

“Thus, even a fleeting suggestion that the market may tighten results in a spike in steel prices.

“As such, the likelihood of iron ore prices falling back to $50/t in the short-term is rapidly declining.”

The S&P Global Platts China Steel Sentiment Index hit a four-month high for August, reflecting the stronger demand.