Iron ore will be the most closely watched commodity in the world this week when Chinese buyers return to the market after the Lunar New Year, days after the steel-making ingredient smashed through $US90 a tonne.

Some analysts are predicting iron ore could crack triple figures in coming days as China has its first chance to absorb the full impact of the supply shock caused by Vale’s tailings dams disaster.

Iron ore bulls believe the commodity could continue its surge because the 30 million-tonne-a-year supply shortfall in Brazil, which will force buyers into the pricey spot market, coincides with China’s traditional restocking period ahead of the spring construction season.

Credit Suisse, ANZ and Commonwealth have predicted that prices will go higher amid uncertainty over Brazil’s regulatory reaction to Vale’s tailings dam problems.

Even Goldman Sachs, which has had a bearish view of iron ore, expects a continued revival of prices as producers outside Brazil fail to boost their output fast enough to fill the vacuum.

“In the near term, the significant disruption to Brazilian supply and the uncertainties associated with it will likely keep iron ore prices elevated and volatile as supply elsewhere cannot adjust quickly enough to offset the shortages,” Goldman analysts noted last week.

The country’s mining authority is grappling with what to do with iron ore mines that have so-called “upstream” dams similar to the one that collapsed last month, killing at least 150 people.

Vale has closed several mining hubs, triggering a surge in prices, which some commentators believe will lead to realised prices matching the $US92 a tonne on the Singaporean futures market.

The expected price rise comes on the back of a two-month rally that added one-third to the value of high-grade product and half to lower-grade ore.

The share prices of Rio Tinto and BHP have ticked up while Fortescue Metals Group added one-quarter to its market worth on supply constraints and the contraction of the premium commanded by higher-grade ore mined by its bigger rivals.

Cleveland-Cliffs chief executive Lourenco Goncalves said on Friday that the impact of Brazil’s catastrophe “has not been properly quantified”.

“As a consequence of Vale’s problems in Brazil, we’re going to see not only a shortage of iron ore but a shortage of pellets,” he said.

Today’s iron ore trading will be particularly keenly watched by WA Treasury officials, who are starting to frame the 2019-20 State Budget.