* Australia cuts 2016 iron ore price forecast to $44.20/T
* China iron ore port inventories highest since Dec 2014 (Adds latest China port inventory, updates prices)
By Manolo Serapio Jr
MANILA, July 8 (Reuters) - Chinese iron ore futures dropped to a one-week trough on Friday, before stabilising at the close, amid excess supply as stocks of the steelmaking commodity at Chinese ports remained at their highest level since December 2014.
Australia, the world's top iron ore exporter, cut its 2016 price forecast by nearly 2 percent to $44.20 a tonne, citing concerns over slowing growth in demand and sees little change in 2017. top market China, inventory of imported iron ore at its major ports climbed nearly 2 million tonnes from the previous week to 104.5 million tonnes on Friday, the highest since December 2014, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV
The most-traded September iron ore on the Dalian Commodity Exchange DCIOcv1 fell as far as 415 yuan ($62) a tonne, before recovering to end at 430 yuan, up 0.4 percent.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI slipped 1.1 percent to $55.20 a tonne on Thursday, data from The Steel Index showed.
Thanks to firmer Chinese steel prices earlier in the week, the spot benchmark has gained 2.2 percent so far this week.
A credit-fuelled rebound in China's construction activity has underpinned stronger steel demand, economists from National Australia Bank said.
"We argue that this rebound is unsustainable, given excess property supply in many locations, and prices should fall on weaker demand," they said in a note.
But the note said uncertainty around the duration of the current trend adds upside risk to the bank's iron ore price forecasts of an average $42.50 a tonne in the second half of 2016 and $40 in all of 2017.
The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed 1.8 percent higher at 2,445 yuan a tonne, but still below Monday's two-month high of 2,468 yuan. ($1 = 6.6871 Chinese yuan)