Iron ore's prospects for the rest of the year aren't that poor as supplies from less efficient mines dwindle, according to Atlas Iron.

Chinese buyers are also replenishing inventories, boosting demand, said David Flanagan, managing director of the Perth-based company. Global supplies from high-cost mines will continue to shrink, he said in an interview on Wednesday. Atlas operates mines in Australia's ore-rich Pilbara region.

The commodity's been on a roller-coaster in 2015, sinking to a six-year low in April on rising low-cost output and weaker growth in China, the biggest buyer, before rebounding into a bull market the same month. Ore then fell to a new low at the start of July as some banks forecast that prices would tumble below $US40, before rallying into another bull market and reaching a two-month high on Wednesday.

"There's more opportunity for an uptick in iron ore prices than there is for a downward tick," Flanagan said by phone. "There's opportunity for more mines to close and there's also opportunity for a buying rally leading into December."

Ore with 62 per cent content at Qingdao rose 1.3 per cent to $US58.18 a dry metric ton on Wednesday, the highest since July 1, according to Metal Bulletin Ltd. Prices bottomed at $US44.59 on July 8, a record in data going back to May 2009.

"We're seeing constant declines in stockpiles in China, and that tells me that there's not an oversupply in iron ore," Flanagan said. "People need to basically restock."

Holdings at Chinese ports fell for four consecutive weeks to 80.1 million tons as of September 4, the lowest in two months, according to weekly data compiled by Shanghai Steelhome Information Technology Co. Inventories reached a 19-month low of 79.35 million tons in June, the data show.

Falling output from smaller mines has boosted demand for low-cost supplies from top producers, according to CLSA analyst Ian Roper. The bulk of price losses this year have passed as construction in China picks up into October, Roper said.

"The supply response has been exceptionally fast," Singapore-based Roper said by phone. "Demand is improving at the moment into the next couple of months. Prices in the short term should hold up OK."

After decades of rapid growth spurred an unprecedented expansion in steel production, China's grappling with excess capacity as a property-led slowdown crimps demand. Even then, the country's purchases of overseas ore were little changed at 613 million tons in the first eight months from a year earlier, according to customs data.

Miners' shares rose on Wednesday amid optimism China will stabilise its financial markets. Atlas jumped 6.9 per cent in Sydney, while Rio Tinto Group, the country's largest iron ore producer, rallied 2.6 per cent.

The biggest suppliers including Rio and BHP Billiton in Australia and Brazil's Vale remain intent on increasing supply as they seek to boost volumes and reduce costs per ton. There's new supply due to appear on the market in the form of ore from Australian billionaire Gina Rinehart's Roy Hill mine, which will start shipments later this year.

"There's still a lot of low-cost supply coming," Roper said. "Prices will have to move much lower again. We can probably test that level again next year," he said, referring to the low of $US44.59 in July.