* Shanghai rebar drops to lowest in nearly three weeks
* Iron ore inventory at China's ports biggest since Sept 2014
By Manolo Serapio Jr
MANILA, Nov 21 (Reuters) - Iron ore futures in China dropped 2 percent on Monday as steel prices hit their weakest in almost three weeks, reflecting concern over slow demand as winter approaches.
Chinese iron ore futures have fallen 16 percent from a 33-month peak as a rally earlier this month lost steam last week following a series of measures by China's exchanges to crack down on speculative trading in commodities including increased transaction fees. ore for January delivery on the Dalian Commodity Exchange DCIOcv1 was down 2 percent at 550.50 yuan ($80) a tonne by 0304 GMT. The contract hit 533 yuan earlier, its weakest in almost two weeks.
"The price has increased too fast and away from fundamentals so going down should be natural," said a Shanghai-based iron ore trader.
"Overall iron ore supply is still more than enough and the only issue was because of high coking coal prices, it created some short-term tightness in high-grade iron ore."
The surge in prices of coking coal, also used in steelmaking, had prompted Chinese mills to use better quality iron ore so they would use less of the fuel. But the ensuing retreat in coal prices had eased demand for high-grade iron ore, the trader said.
Stockpiles of imported iron ore at 46 Chinese ports reached 110.58 million tonnes on Friday, up 2.83 million tonnes from the previous week, according to data tracked by industry consultancy SteelHome. SH-TOT-IRONINV
That was the highest level since September 2014, and the inventory has risen 19 percent this year.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB fell 1 percent to $72.79 a tonne on Friday, according to data from Metal Bulletin. The spot benchmark lost 8.8 percent last week, ending a five-week rally.
Available iron ore supply in China may remain high as steel demand is bound to be weak during winter, that usually lasts between December and February, traders said.
Temperature is starting to drop in China's northern parts, the Shanghai trader said, although it remains warm enough in southern areas for steel-intensive construction projects to continue.
The price of rebar, a construction steel product, was down 0.9 percent at 2,757 yuan a tonne on the Shanghai Futures Exchange SRBcv1 , after touching 2,660 yuan earlier, its lowest since Nov. 3. ($1 = 6.8964 Chinese yuan)