Iron ore will rally to average $120 a metric ton as China rebuilds inventories in the year’s second half, rebounding from a decline in the next few weeks, according to Macquarie Capital (Europe) Ltd.

The commodity used to make steel will fall for another four to six weeks until China’s stockpiles bottom out between last year’s low of a 17-day supply and a “critically low” 14 days, analysts Jeff Largey, Alon Olsha and Daniel Lurch said in an e-mailed report today. Stocks are already down to 21 days, compared with 30 days a year ago, according to the report.

The benchmark price dropped 30 percent to $110.90 a dry ton from a 16-month high on Feb. 20, according to The Steel Index Ltd. New output trailing expectations in the second half and Chinese demand will lead prices back to an average of $120, Macquarie estimated.

“There could be four to six weeks of further weakness until the China destock ends,” the analysts said in the report. “Even without a robust restock, we believe the end of destocking should return iron ore prices to about $120 a ton” in the second half.