Iron ore rallied solidly into the $US70 a tonne range as Chinese steel futures surged, with local mills seen continuing to produce at high rates to take advantage of strong profit margins.

The spot price of iron ore rose $US2.57, or 3.7 per cent, to $US72.68 a tonne on Monday, according to Metal Bulletin - its highest since mid September. The steelmaking raw material - which advanced 2.9 per cent on Friday - has now risen more than 20 per cent from late October. Iron ore continues to defy forecasts that it will reverse into the $US50 range as global supply slowly rises and China's economy gradually slows.