The price of iron ore has risen for a third consecutive day on the back of fresh stimulus in China, which could help revive flagging demand growth from the world’s largest consumer of iron ore.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US50.80 a tonne, up 0.2 per cent from its prior close of $US50.70 a tonne.

Last week the commodity enjoyed its best run of the year with gains of almost 7 per cent and it now trades 8.8 per cent above the recent 10-year low of $US46.70.

The latest session was the first since news broke that the People’s Bank of China had reduced the level of funds that commercial banks must hold in reserve by one percentage point in a bid to stimulate lending. It was its second such cut this year and largest since 2008.

While the news is seen as a positive for commodity markets, some analysts have queried whether the move is a hint that the Chinese economy is in worse shape than the market currently perceives.

The brief iron ore recovery has also come just as market watchers turn more bearish, with a flurry of analyst downgrades seen getting them ahead of the pricing curve for the first time since the bear market began.

There is a broad expectation that prices will soon return back into the $US40s and perhaps lower, but for now beaten-down miners are receiving some respite, even if most in the sector outside Vale, BHP Billiton and Rio Tinto would be losing money at current prices.

Meanwhile, the strategies of BHP and Rio remain in focus with Philip Kirchlechner, a Perth-based director of Iron Ore Research and former head of marketing at Fortescue Metals, saying the mining giants were likely caught off-guard by the impact of their rising supply, with the whole sector likely to find it difficult to pull back on production.

“I don’t think they predicted the consequences of these expansions, and that the price fall in response to the expansions would be that dramatic,” he told Bloomberg.

“Just as it was hard for them to get moving at the beginning of the China boom, it’s hard for them to stop expanding, just like a stampede of elephants.”