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Iron ore and industrial metals fell on Tuesday, weighing heavily on debt-laden mining stocks, as analysts said the recent recovery in prices could not be sustained without a pick-up in Chinese demand.

Commodities have rallied sharply since the middle of January when concerns about growth in China, the world’s biggest consumer of raw materials, reached near panic levels. Iron ore, the key ingredient in steelmaking, has risen 31 per cent, while copper has gained 15 per cent and zinc 20 per cent.

While sentiment has improved, helped by a recovering oil price, fundamentals are still weak, with overcapacity across most markets and large stockpiles that need to be drawn down, according to analysts.

“We certainly would be cautious on hopes of further upside — demand simply isn’t aggressive enough,” said Colin Hamilton, head of commodities research at Macquarie.

Iron ore, which surged by a fifth in one session last week, fell $3.80, or 6.8 per cent, to $51.70 a tonne on Tuesday, while copper dipped 0.2 per cent to $4,943 and zinc fell 2.1 per cent to $1,746.

The falling iron ore price weighed on miners including Anglo American and BHP Billiton, which dropped 10.8 per cent and 6.5 per cent respectively. Glencore was down 4.7 per cent, hit by the weakness in industrial metals.

Like the commodities they produce, miners have also enjoyed explosive rallies from their January lows as hedge funds have scrambled to close bearish wagers that were among the industry’s most profitable positions in 2015.

“On current evidence we don’t see a surge in demand that would justify the recent moves,” said Andrew Keen, analyst at Haitong Research, as he slapped a “sell” rating on Anglo American and downgraded BHP and Glencore.

“The overriding problem remains that there is too much overhang in Chinese construction in the near term to lead to a surge in commodity demand,” he added.

Miners have been hard hit by a multiyear downturn in commodity prices and worries about growth in China. This was reflected in Antofagasta and Norilsk Nickel’s annual results on Tuesday.

Warning of another tough year ahead, Chilean copper producer Antofagasta said it would not pay a final dividend, while Norilsk reported its lowest profits in seven years after the 40 per cent collapse in nickel prices during 2015.

“At least 20-25 per cent of the global supply needs to be cut for the nickel price to enter into a sustained recovery,” Norilsk said in its results statement, adding that 500,000 tonnes of nickel stocks overhanging the market would blunt the impact of any supply reductions.

Rather than supply cuts, Mr Hamilton of Macquarie said the market faced the possibility of mine restarts or at the very least “aggressive producer hedging” following the recent rally.

Indeed, after last week’s surge, one junior iron ore producer in Australia has already started talking about restarting production from one of its mothballed mines if prices settle above $45 a tonne.

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