* Dalian iron ore falls by 6 pct downside limit
* Dalian exchange lifts transaction cost on iron ore
* Hebei to ban reopening of shut mills
* Shanghai rebar pulls back further from 19-month top (Adds China's Hebei province bans mill restarts, updates prices)
By Manolo Serapio Jr
MANILA, April 26 (Reuters) - Iron ore futures in China slid 6 percent on Tuesday to pull away from a 20-month high after authorities moved to cool rapid gains and as the country's top steelmaking province banned the restart of once-shut mills.
China's Hebei province will not allow the reopening of steel mills that had been previously ordered to shut down, the official Xinhua News Agency reported, as soaring steel prices lure back producers. Dalian Commodity Exchange raised the transaction fees on iron ore and polypropylene futures contracts to 0.018 percent from 0.009 percent starting on Tuesday. rebar steel futures also slipped as China's exchanges stepped in to cool speculative buying in commodities that has bloated trading volumes, lifted prices to multi-month highs and raised concerns of a dangerous bubble. most-traded September iron ore on the Dalian exchange DCIOcv1 closed down 6 percent at 450.50 yuan ($69.36) a tonne. It touched 502 yuan on Monday, its strongest since August 2014.
"The speculation-driven futures rallies are not sustainable and consolidation may have some spill-over effects on the spot market," Argonaut Securities Helen Lau said in a note.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.8 percent to $65 a tonne on Monday, according to The Steel Index.
Last week's rally in steel lifted the spot benchmark to its highest since January 2015 at $68.70 a tonne, but it has since recoiled along with Chinese steel prices.
Fitch Ratings said on Monday that the rapid increase in Chinese steel prices is not sustainable as it is largely due to a seasonal pick-up in construction and elevated speculation in the steel futures market.
The most-active rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 fell 3.8 percent to end at 2,554 yuan a tonne.
The contract reached a 19-month high of 2,787 yuan on April 21 when its turnover was worth nearly 50 percent more than the total value traded on the Shanghai stock exchange. ($1 = 6.4951 Chinese yuan)