The price of iron ore rose to its highest level in nearly three months, as declining stockpiles at China’s major ports sparked concerns about a temporary shortage of the raw material.

A benchmark price for iron ore, published by The Steel Index, rose to US$62.60 a metric ton on Wednesday, up 0.8% from Tuesday and its highest level since March 2. The price is up 9% from a week earlier.

Iron-ore stockpiles in China have been dwindling as steelmakers build up their stores of the raw material, resulting in limited availability for some types of ore, analysts say. Inventories at the country’s port facilities last week declined to 84.9 million tons, from 86.6 million tons the week earlier, according to data provider Mysteel. Port stocks were roughly 100 million tons at the start of 2015.

“Spot supply remains tight,” said Goldman Sachs analyst Christian Lelong. China’s imports of the commodity fell nearly 4% from a year earlier in April—the latest available data—in part due to weaker shipments from Australia where supplier Atlas Iron Ltd.temporarily suspended some exports due to low prices.

Georgi Slavov, head of basic resources research at commodities-broker Marex Spectron, said he was surprised by the sudden improvement in market confidence. He said it was clear the shortage was only a short-term issue for a market that was broadly viewed to be oversupplied.

A recent rise in freight rates on the main shipping routes to China may indicate a greater number of cargoes headed to the world’s second-largest economy, which should ease any shortfall, analysts say. China buys two-thirds of all iron ore traded by sea.

“We are still amused, and puzzled, by the recent resurgence of the bullish sentiment on the market,” said Mr. Slavov. He said the only other catalyst for the rally was “general talk about potential government spending, which still has to materialize.”

While iron-ore prices have lifted from a decade-low below US$47 a ton last month, the commodity is still down nearly 40% from a year earlier.

Analysts have further soured on the commodity’s outlook in recent weeks. Most forecast another downturn in prices in the third quarter of the year, typically a weak period for iron-ore demand.

Steel mills usually ramp up production between April and June in the run-up to China’s peak construction season, after which purchases of raw materials such as iron ore tend to decline.

On Wednesday, Citigroup cut its long-run forecast for the commodity by a third, to US$55 a ton, and said it expects prices to average closer to US$40 a ton over 2016-18.

“For the iron-ore market, the next decade is shaping up to be a complete reversal of the past decade,” during which the market enjoyed an unprecedented boom, its analysts said in a report.

Citi forecast seaborne iron-ore demand to decline over that period as China’s appetite for steel ebbs.

According to Goldman Sachs’ Mr. Lelong, seaborne demand could peak as early as next year. “The iron-ore market is becoming a zero-sum game,” he said.