Benchmark 62% spot iron ore entered China's Golden Week holiday at $104.20 a tonne, but as traders returned they quickly chased the price of the commodity to within shouting distance of $120.
After three days of losses – the price of the commodity fell again on Monday to $113 – it appears China's iron ore bulls are having second thoughts.
Iron ore's rise from less than $40 only five years ago has been on the back of an incredible ramp up in demand from China – the world's second largest economy today uses up around 60% of global supply as it pushes out steel at rate of two million tonnes per day.
But the other side of the equation – supply – could start having a bigger impact on the price as new projects come on stream.
World number one producer Vale today reiterated its production forecast of 312 million tons of iron ore for 2012 and is working on expanding existing sites for an additional 170 million tons of iron ore per year.
Brazil as a whole is slated to produce 820 million tonne of iron ore in 2016, a more than 60% jump from today's levels according to Ibram, an industry research house in the South America country.
While number two and three of iron ore's troika – Rio Tinto and BHP – have slowed investment in new iron mines, production in Australia is still on track to reach 750 million tonnes – almost all of it for export – in the not too distant future.
The global seaborne iron ore trade is around 1 billion tonnes today and is growing at less than 2%. And China also has 100 million tonnes of ore in stockpiles sitting at ports.
Chinese demand could pick up again – infrastructure spending is continuing unabated – but that may not be enough to absorb all the new output.