* Dalian exchange lifts transaction cost on iron ore
* Shanghai rebar pulls back further from 19-month top
By Manolo Serapio Jr
MANILA, April 26 (Reuters) - Iron ore futures in China pulled back from 20-month highs on Tuesday after authorities increased the transaction cost to rein in volatility after recent rapid price gains.
The 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 was down 3.9 percent at 460.50 yuan ($71) a tonne by 0249 GMT after hitting 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 1 percent to 2,627 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 = 6.4929 Chinese yuan)