Deutsche Bank has brushed off signs of oversupply in iron ore markets, suggesting China’s stimulus package could rocket prices of the steelmaking ingredient to $US130 a tonne next year.

The bullish call comes after iron ore futures plunged 5 per cent to below $US100 a tonne on Thursday as Beijing’s latest attempt to stabilise the property market again fell short of expectations. Prices edged back above $US100 a tonne on Friday.