* Dalian iron ore rises over 2 pct, Shanghai rebar steady
* Lack of steel demand keeps lid on raw material buying - Sucden
By Manolo Serapio Jr
MANILA, Aug 5 (Reuters) - Dalian iron ore futures rose more than 2 percent on Wednesday, supported by firmer steel prices that encouraged Chinese mills to chase some cargoes and kept the spot benchmark near recent highs.
But the more modest gains in steel futures suggest prices may have peaked for now, with demand in top consumer China remaining sluggish.
"We do caution that buying appetite is still weak as a lack of significant demand interest in the steel market keeps a lid on demand for raw materials," Sucden Financial senior analyst Kash Kamal said in a note to clients.
Iron ore for January delivery on the Dalian Commodity Exchange DCIOcv1 was up 2.3 percent at 373.50 yuan ($60) a tonne by 0312 GMT.
The January rebar contract on the Shanghai Futures Exchange SRBcv1 gained 0.1 percent to 2,088 yuan a tonne, recoiling from this week's high of 2,132 yuan, a one-month peak.
Chinese steel prices rose from last weekend after recent steep losses that have forced some mills to curb production.
China's steel consumption shrank nearly 5 percent in January-June, according to the China Iron and Steel Association, and traders said the construction lull during the summer months would keep prices low.
"Some traders and mills are trying to sell more as buying isn't as strong as the rally in prices and they are worried that prices might have hit the ceiling at the moment," said a Chinese steel trader.
Mills in Hebei, China's top steel producing province, let their agents in Beijing raise prices for spot rebar to a minimum 2,050 yuan per tonne, pushing up the price by about 90 yuan on Tuesday, according to The Steel Index (TSI).
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.5 percent to $55 a tonne on Tuesday, based on TSI data, a day after jumping 4.5 percent.
The spot benchmark hit $55.30 on Monday, matching last week's peak, which was its highest since July 2.
Rebar and iron ore prices at 0312 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
2088
+3.00
+0.14 DALIAN IRON ORE DCE DCIO JAN6
373.5
+8.50
+2.33 SGX IRON ORE FUTURES SEP
51.51
+0.45
+0.88 THE STEEL INDEX 62 PCT INDEX
55
-0.30
-0.54 METAL BULLETIN INDEX
55.29
-0.34
-0.61
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.2088 Chinese yuan)