* Dalian iron ore rose as much as 6 pct to hit upside limit
* Singapore iron ore up more than 2 pct
* Shanghai rebar climbs to 8-month high before cutting gains
By Manolo Serapio Jr
MANILA, March 10 (Reuters) - Iron ore futures in China climbed 4 percent on Thursday and those in Singapore rose as well as Shanghai steel prices recovered to touch an eight-month high, suggesting a recent rally may not be done as yet.
The renewed strength in ferrous futures could again lift bids for physical iron ore cargoes and push up the spot benchmark which on Wednesday slid nearly 6 percent after spiking by a record 19.5 percent on Monday.
"As long as steel prices keep going up there is always a logic for iron ore prices going up. It's not illogical," said a Shanghai-based iron ore trader.
Chinese steel mills are boosting production ahead of April and May which are seasonally peak months for steel demand in China, the trader said.
The most-active May iron ore on the Dalian Commodity Exchange DCIOcv1 was up 4 percent at 437.50 yuan ($67.15) a tonne by the midday break. It rose as much as 6 percent to hit the exchange-set ceiling of 445.50 yuan earlier, its strongest since January last year.
On the Singapore Exchange, May iron ore SZZFK6 climbed 2.3 percent to $53.11 a tonne.
Those gains bode well for the spot benchmark .IO62-CNI=SI which on Wednesday tumbled 5.9 percent to $59.60 a tonne, according to The Steel Index (TSI). That followed Monday's 19.5 percent rally that was the biggest single-day percentage gain based on TSI data that dates back to 2008.
A rebound in Chinese steel futures helped fuel the strength in iron ore on Thursday. The most-traded May rebar on the Shanghai Futures Exchange SRBcv1 rose as much as 5 percent to its upside limit of 2,201 yuan, the highest since last July, before cutting gains to stand at 2,134 yuan by midday.
Argonaut Securities analyst Helen Lau said she expected China's crude steel production to have risen 2-3 percent in February from January due to a recovery in seasonal demand.
But Lau was concerned that higher production and declining exports would "worsen domestic oversupply".
"We believe the recent iron ore price rebound was mainly led by steel price increases. But with a lack of fundamental support to steel, we believe the iron ore price surge will be short-lived," Lau said in a note, reiterating her bearish stance towards iron ore the in the medium- to long-term.
China's steel exports dropped to 8.11 million tonnes in February from 9.74 million tonnes in January, falling for a second straight month, underlining a rise in anti-dumping measures against Chinese producers. and iron ore prices at 0411 GMT
Contract
Last
Change Pct Change SHFE REBAR MAY6
2134
+37.00
+1.76 DALIAN IRON ORE DCE DCIO MAY6
437.5
+17.00
+4.04 SGX IRON ORE FUTURES MAY
53.11
+1.18
+2.27 THE STEEL INDEX 62 PCT INDEX
59.6
-3.70
-5.85 METAL BULLETIN INDEX
58.02
-5.61
-8.82
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.5155 Chinese yuan)