Despite last week’s price rally, bearishness is quickly returning to the oversupplied iron-ore business.

Brazilian iron-ore giant Vale last week reported an all-time quarterly iron-ore production high of 74.5-million tonnes in the three months to March 31, and the supply tide is about to be lifted further by 60-million tonnes a year from Rio Tinto’s expansion in Australia’s Pilbara region and another 55-million tonnes a year as Gina Rinehart’s new Roy Hill iron-ore mine is commissioned.

Liberum analysts Richard Knights and Ben Davis cautioned last week that prices would need to move much lower to drive further supply rationalisation.

This was because much of the remaining Australian and Brazilian supply would continue unless prices fell to a point where significant per-tonne losses persisted, which would likely be in the high-$30/t range.

Hellenic Shipping News described the recent price rally as a mere dead cat bounce and published strategist warnings of a short-lived upside as well as comments from analysts that the recent price rise was a flash in the pan.

Iron-ore prices rose from $46.70/t at the start of April to $58.70/t last week, partly reversing a steep fall, but Liberum pointed out that total Chinese month-on-month iron-ore imports were in decline and had been so since September last year.

Fortescue head Andrew Forrest, put the blame squarely on Australian producers Rio Tinto and BHP Billiton for exacerbating the iron-ore price fall through oversupply, which he said was causing collateral damage to the people of Australia by shaping the forthcoming federal budget.

Australia’s Treasurer, Joe Hockey, is reportedly preparing to base his budget on an iron-ore price of only $35/t, well down on the heady $100/t-plus numbers of the past.

Mining company Cliffs Natural Resources, in the same publication, described seaborne supply of iron-ore to China as a doomed business.

“I can’t wait to get out of the seaborne trade,” Cliffs CE Lourenco Goncalves said.