* Iron ore steadies after gaining 26 pct in 14 days
* Shanghai rebar falls over 2 pct, sluggish demand
SINGAPORE, Nov 21 (Reuters) - Iron ore may fall this week as the market takes a breather after a rally seen to have taken place too swiftly, with sluggish steel demand in top consumer China likely to curb buying of the raw material.
Iron ore with 62 percent iron content eased 0.1 percent to $147.40 a tonne on Friday, according to the Steel Index .IO62-CNI=SI, ending a 14-day rally which was the commodity's longest winning streak.
Iron ore gained more than 26 percent during that period, quickly rebounding from a slide of 31 percent in October, although traders said volumes in the spot market had not been big and prices may have outpaced fundamentals.
"The feeling is it's risen a little bit too quickly from the previous lows and it's beginning to get to that point where it's looking a bit toppish," said Rory MacDonald, iron ore broker at Freight Investor Services.
MacDonald said the recent rally in iron ore prices was "not driven by huge hunger for iron ore".
"End-user demand for steel in China is very, very subdued. People are not very optimistic, bordering on bearish for the rest of this year and the beginning of next year through into the Lunar New Year holidays," he added.
A decline in China steel prices, reflecting sluggish demand, gives mills less reason to produce more, cutting appetite for iron ore.
Steelmakers across Asia, including the Chinese, have been dropping prices to deal with weaker demand.
Tokyo Steel Manufacturing Co, Japan's biggest construction steelmaker, on Monday said it would cut steel prices across the board by 5,000 yen ($65) per tonne to cope with poor demand at home and head off potential increases in steel imports from Asian rivals.
The most-traded May rebar contract on the Shanghai Futures Exchange fell 2.1 percent to 4,066 yuan ($640) a tonne on Monday, its second day of decline.
Steel prices in China's spot market have similarly dropped over the weekend, with billet down by 70 yuan a tonne in the key province of Hebei, said an iron ore trader in the port city of Rizhao in eastern Shandong province.
Iron ore prices may drop by $5-$10 a tonne for the rest of November, with "many Chinese steel mills having finished restocking in the past two weeks," he said.
"I don't expect another big drop in prices because spot supply is still tight and we may see mills come back to the market next month for winter restocking."
Offer prices for Australian iron ore in China slipped a dollar on Monday, with 61.5-percent grade Pilbara fines quoted at $145-$147 a tonne, including freight, and 63-percent grade Newman fines at $150-$152, said Chinese consultancy Umetal.
hanghai rebar futures and iron ore indexes at 0355 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 4066 -88.00 -2.12
PLATTS 62 PCT INDEX 148 -0.50 -0.34
THE STEEL INDEX 62 PCT INDEX 147.4 -0.20 -0.14
METAL BULLETIN INDEX 145.97 -2.15 -1.45
*In yuan/tonne
#Index in dollars/tonne, show close for the previous trading day
($1=76.9000 Japanese yen)
($1=6.3554 Chinese yuan)
(sourced Reuters)
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