Call it the world's most unlikely bull market. Iron ore advanced for a third day, taking gains to 25 per cent from a six-year low even as the world's top shipbroker predicted renewed losses.

Ore with 62 per cent content delivered to Qingdao climbed 4.6 per cent to $US55.89 a dry metric ton on Wednesday, according to Metal Bulletin. That was the biggest increase since July 9. While the gain of more than 20 per cent from the July 8 low met the common definition of a bull market, prices remain 22 per cent lower this year.

"The rebound will be short-term and lower prices are expected, we still have an oversupply market," Kelly Teoh, an iron ore derivatives broker at Clarkson in Singapore, said on Wednesday before the price data. "It seemed there's still some tightness in the physical spot cargoes."

Iron ore's been whipsawed this year, tumbling to a then six-year low in April on rising supply and stalling demand growth, before rebounding into a bull market later the same month. Since then, it's shifted back into bear-market territory, set a new low, and rallied again. Banks including Goldman Sachs Group forecast further losses, with Citigroup saying last week that bets on iron ore declines were its top commodity trade as raw materials traded at the lowest level since 2002.

"I see around $US50 in the second half as a reasonable average but expect volatility," said Daniel Morgan, an analyst at UBS in Sydney. "The entry of Roy Hill slated for October will be a catalyst to watch," he said, referring to the mine backed by Australian billionaire Gina Rinehart that's scheduled to begin shipments before year-end.

Iron ore's latest rally stands out amid losses in raw materials tracked by the Bloomberg Commodity Index, which fell 11 per cent this year. Oil in New York entered a bear market last week, while copper in London fell to a six-year low on Monday.

Gains for iron ore contracts on the Dalian Commodity Exchange preceded the advance in the Metal Bulletin price, which is issued once a day. Futures in China advanced 2.6 per cent to close at 369 yuan ($US59.43) a ton. Prices are up 5.9 per cent from this year's closing low on July 24.

"Speculation steel mills are purchasing iron ore at ports has supported futures and physical markets," said Huang Huiwen, a Shanghai-based analyst at Shanghai Cifco Futures Co.

While maintaining its bearish outlook over the rest of 2015 and into next year, Goldman Sachs highlighted what it said were disappointing exports from Australia this month, according to a report on Monday. Scheduled maintenance at some terminals may be affecting shipments, analyst Christian Lelong wrote. The bank sees lower prices for each quarter through to June 2016.

Port stockpiles in China will probably extend a rebound as supply rises, according to Clarksons Platou Securities analyst Jeremy Sussman, who predicted a drop to $US35 a ton this half before Wednesday's gain. The inventories, at 82.5 million tons last week, may climb to 95 million tons by September, said Australia & New Zealand Banking Group Ltd.