Iron ore has taken a beating this year, with prices correcting over 30 percent from their year-to-date high of $135 a tonne in January, but one analyst told CNBC this presents the perfect buying opportunity.
"It is time to tactically get long iron ore swaps and Fortescue Metals," Conor O'Malley of independent research firm View from the Peak said in a note.
While a weakening real estate market in China, which accounts for around two-thirds of global iron ore purchases, coupled with a flood of ore supply suggests further gloom for the market, O'Malley said this shouldn't put investors off.
"Accepting all of the above, it is still time to buy iron ore exposure as we move into the Chinese winter," he said.
Among factors that underlie iron ore's vicious decline this year are reports that commodities like iron ore and copper are being used as collateral for financing deals in China, raising concerns that a crackdown by authorities would dampen demand.
But View from the Peak's O'Malley is confident that the market's dynamics will turnaround soon: "A 30 percent correction in any commodity market will produce a supply reaction. Iron ore is no different," he said.
He pointed out that weak prices forced a number of Chinese iron ore miners offline, resulting in tighter domestic supply. This should put upward pressure on prices especially as the market heads into the harsh Northern winter which normally reduces supply, he said.
O'Malley said iron ore prices potentially have another $8 per tonne to fall, but noted upside potential of $17 from current levels, making the risk-ratio compelling.