* Seasonally slow steel demand period in China
* Shanghai rebar flat on week, Dalian iron ore up slightly (Adds HSBC comment, updates prices)
By Manolo Serapio Jr
MANILA, June 3 (Reuters) - Iron ore was headed for its fifth weekly drop out of six after falling to its lowest since February earlier this week, with downward pressure likely to build as China's steel demand slows and iron ore supply rises.
The steelmaking ingredient has fallen 30 percent from its peak in April when restocking driven by firmer steel consumption and a resurgent Chinese futures market combined to lift spot iron ore to its strongest level in 15 months.
"Chances are we can see prices retreat further," said Ric Spooner, chief market analyst at CMC Markets in Sydney, citing China's seasonally weak steel demand and higher iron ore supply globally courtesy of Australia's Roy Hill mine and Vale's VALE5.SA mine expansion in Brazil.
Construction activity usually slows down in China from June and through summer due to hot weather, curbing steel demand from the sector.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slid 2.8 percent to $47.90 a tonne on Thursday, according to The Steel Index.
That was the lowest since Feb. 19 and brought the spot benchmark's weekly loss so far to nearly 6 percent.
But Spooner said iron ore is unlikely to test new lows with Chinese steel demand expected to find support from Beijing's efforts to spur economic growth via more infrastructure spending.
"I'm inclined to the view that iron ore has a decent chance of holding in the low $40s," he said.
Iron ore touched $37 a tonne in December, its lowest in at least seven years.
The most-traded rebar on the Shanghai Futures Exchange SRBcv1 closed up 1.5 percent at 1,988 yuan ($302) a tonne, recovering some lost ground after hitting a nearly three-month low of 1,894 yuan on Monday. It was flat for the week.
"We believe oversupply will play its part in the coming few months, especially considering June-August is a traditionally slow season for steel demand," HSBC analysts said in a note.
"Therefore we expect Chinese steel prices to remain under pressure amid oversupply going forward."
On the Dalian Commodity Exchange, iron ore DCIOcv1 rose 0.4 percent to 347.50 yuan a tonne, after similarly touching a three-month low of 333 yuan on Monday. It gained 0.9 percent this week. ($1 = 6.5843 Chinese yuan)