In recent weeks the price has yo-yoed as high as $US70.46 per tonne, gaining and losing as much as $US10 per tonne per week.

Analysts say "astronomical" trading in iron ore futures on the Chinese Dalian Commodity Exchange has fuelled iron ore's rise.

According to Goldman Sachs, there have been two days in April where futures volumes have been greater than the total amount of iron ore that China actually imported for the whole of 2015 (more than 850 million tonnes).

Iron ore spiked 16 per cent in one week in April and there was a similar spike in early March, when the price rose nearly 25 per cent to $US63.74 per tonne only to lose those gains within days.

CLSA head of commodities Andrew Driscoll said "mum and dad" Chinese investors were indeed to blame for the volatile price moves of the mineral.

"With the speculative interest we understand the majority are retail investors," he said.

"It's mum and dads thinking there's an opportunity in steel and iron ore futures. 

"There's been an incredible amount of liquidity in the steel futures and Dalian iron ore contract, much of which does reflect retail participation.

"From a shorter-term perspective that's going to exacerbate the undershoot and overshoot of prices when the market's tight or reverts to being well supplied."

The other factor exacerbating the price movements was a relative lack of an inventory buffer, he said.

"Inventory through the supply chain was destocked aggressively through the second half of last year," said Mr Driscoll.

"Higher volatility than what we've seen is a function of the lack of inventory creating a buffer.

"Going forward we'd expect the chain to have fairly low levels of inventory so some level of volatility should be expected."

However, Mr Driscoll said that this type of volatility has happened before.

"Volatility is nothing new in the iron ore market.

"Perhaps it's been a little high in recent history but we've regularly had significant corrections and sharp rallies since the evolution of the spot market."