Analysts at Morgan Stanley warned that the price of iron ore in the global market has reached a peak and will average $133 per tonne for the rest of 2013.

Similar forecasts had been made by analysts from other banks such as Deutsche Bank and Bank of America. Morgan Stanley said spot iron ore price has likely peaked in February.

The drop in prices is explained by the drop in demand after Chinese steelmakers restocked iron ore during winter and boosted purchases as confidence in China's economy improved. China's National Development and Reform Commission (NDRC) pointed out that the three largest miners and some traders even delayed or controlled iron ore delivers to create the wrong impression that there is a shortage of the basic steelmaking commodity.

BHP Billiton (ASX: BHP) denied the Chinese agency's allegation and said it produced record volumes of iron ore for the last six months of 2012, which it all sold and delivered. Vale and Rio Tinto did not comment on the NDRC accusation.

The NDRC also said the pricing mechanism is not reasonable since major overseas miners inked long-term contracts with Chinese steel mills that stipulated a fixed quantity of iron ore orders but without a fixed price.

The strong demand from Chinese steel mills caused the benchmark spot iron ore price to almost double from the three-year lows in September 2012 at $86.70 per tonne.

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