The iron ore price is rebounding towards the benchmark price of $US60 a tonne in a dramatic turnaround from the decade lows it has hit.

Benchmark iron ore for immediate delivery to the port of Tianjin in China was $US58.70 a tonne, up from $US57.00, at the close on Monday.

• ASX 200 nears seven-year high
• BHP Billiton hit with massive tax bill

The moves are providing welcome breathing space for Australia’s junior miners.

The stocks of Fortescue Metals and smaller miners such as BC Iron and Mount Gibson Iron have been rising, with the iron ore rally believed to be partly related to short trading speculators covering their positions.

The surge in iron ore saw the ASX 200 close on Monday at its highest at-close level in seven years, tantalisingly close to the 6000 mark.

However, at 10:40 on Tuesday the index had fallen again to 5972.

– with AAP