"You could be forgiven for thinking iron ore is turning a corner," analysts including Richard Knights and Ben Davis said in a note. Photo: Rio Tinto

Iron ore's recent gains may prove to be unsustainable and there's now a fresh opportunity for investors to bet on losses in miners' shares, according to Liberum Capital, which listed Rio Tinto Group and BHP Billiton among candidates for selling short.

"You could be forgiven for thinking iron ore is turning a corner," analysts including Richard Knights and Ben Davis said in a note on Wednesday, citing gains in prices since December, plans by miners to cut supply growth and Chinese import data. "We don't think so and see the recent sector rally as an opportunity to re-instate shorts in Rio, Anglo and BHP."

Iron ore has rebounded in 2016 after three years of losses spurred by rising low-cost supply from the world's largest miners including Rio, BHP and Brazil's Vale, which is set to report production data this week. Seaborne supply will still increase by about 6 per cent in 2016 and demand from China is weakening, according to Liberum.

"Whilst the expected rate of supply growth has moderated it remains significant over the next two years, particularly in the face of a declining demand environment," the analysts said. Output may increase by about 80 million metric tons this year and 94 million tons in 2017, they estimated.

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Ore with 62 per cent content delivered to Qingdao advanced 1.1 per cent to $US46.78 a dry ton on Tuesday, the highest since November 16, according to Metal Bulletin. The commodity bottomed at $US38.30 in December, the lowest for daily prices dating back to May 2009.

Rio shares traded at 1885 pence in London on Wednesday after dropping to a low of 1557 pence on January 20, while BHP was at 700.1 pence, up from 571.6 pence last month. Anglo American, which bottomed at 215.55 pence in January, traded at 408.75 pence.

So far this year in London, Anglo American's shares have surged 50 per cent.

Earlier in the day, Anglo American's credit assessment was cut to junk by Fitch Ratings, following a similar downgrade by Moody's Investors Service this week, as the ratings company questioned the miner's ability to sell assets in a "buyers' market".

The company's rating was reduced to BB+ with a negative outlook from BBB-, Fitch said in a statement on Wednesday. Moody's cut Anglo to Ba3 on Monday, while Standard & Poor's has Anglo at BBB-, its lowest investment grade.

Anglo, which became the first major London-based miner to be rated junk, on Tuesday said it's looking to speed up sales of coal and iron ore assets after losses bled into a fourth year. It's trying to engineer a turnaround by focusing on its best mines that produce diamonds, platinum and copper, and wants to raise $US4 billion from sales and cut net debt to less than $US10 billion this year.

"The negative outlook primarily reflects the high level of uncertainty regarding the ultimate success of the group's restructuring plan," Fitch said. With several of Anglo's available assets being marginally profitable or making a loss, "this raises the question of whether they will attract a purchase multiple that is acceptable" to management, it said.