* Spot iron ore at highest since October
* Has gained nearly 18 pct this year to be top commodity gainer
By Manolo Serapio Jr
MANILA, Feb 24 (Reuters) - Iron ore futures in China edged higher on Wednesday as Shanghai steel trimmed losses, boding well for spot iron ore prices, whose rally has allowed it to outshine gold to be the best performing commodity this year.
Spot iron ore has risen nearly 18 percent this year after chalking up heavy gains this week as it zoomed past $50 a tonne for the first time since October. recovery in steel prices in China as mills looked to a brisk pickup in seasonal demand boosted appetite for the steel-making raw material.
The most-traded May iron ore on the Dalian Commodity Exchange DCIOcv1 closed up 0.5 percent at 372.50 yuan ($57) a tonne, recovering from a session low of 366.50 yuan.
Construction-used rebar for May delivery on the Shanghai Futures Exchange SRBcv1 eased 0.6 percent to close at 1,929 yuan a tonne, off a low of 1,916 yuan. Rebar hit 1,968 yuan on Monday, its strongest since Sept. 11.
Traders are keeping price offers for spot iron ore cargoes high, hoping to sustain the upward momentum, said a Shanghai-based trader.
"There is still some support for prices from the buying side since some mills are going to resume production and they expect steel demand to pick up during spring," the trader added.
Benchmark 62-percent grade iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI gained 0.4 percent to $50.50 a tonne on Tuesday, the highest since Oct. 27, based on a data compiled by The Steel Index.
Marex Spectron analyst Hui Heng Tan attributed the recent price spike to a temporary disruption in supply from top exporters - Australia and Brazil - due to weather and maintenance issues, and is unsure whether the strength can last.
"We are still struggling to identify any signs of change in the downstream steel market fundamentals," Tan said in a note.
Before this year's recovery, iron ore prices had slumped 70 percent in the past three years amid a global glut as Chinese steel demand growth slowed.
Australia's Fortescue Metals Group FMG.AX reported a 4 percent fall in half-year profit, as faster-than-expected cost cutting helped it largely offset a slide in iron ore prices. and iron ore prices at 0726 GMT
Contract
Last
Change Pct Change SHFE REBAR MAY6
1929
-12.00
-0.62 DALIAN IRON ORE DCE DCIO MAY6
372.5
+2.00
+0.54 SGX IRON ORE FUTURES APR
46.1
-0.62
-1.33 THE STEEL INDEX 62 PCT INDEX
50.5
+0.20
+0.40 METAL BULLETIN INDEX
51.6
+0.08
+0.16
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.5321 Chinese yuan)