* Iron ore gains capped by high stocks at China's ports
* China's port stocks near 13-year peak at 130 mln T
By Manolo Serapio Jr
MANILA, March 13 (Reuters) - Shanghai rebar steel futures rose nearly 3 percent on Monday, supported by a pickup in seasonal demand in top consumer China that also lifted Chinese iron ore off of a one-month low.
But bloated stockpiles of iron ore at China's ports - holding near their highest in at least 13 years - capped price gains in the steelmaking raw material.
The most-active rebar on the Shanghai Futures Exchange was up 2.7 percent at 3,496 yuan ($506) a tonne by the midday break.
"Seasonal steel demand is still continuing to recover after the cold weather," said a Shanghai-based trader.
Steel consumption in China typically bounces back along with construction activity during spring. Traders expect this year's demand to get a further boost from Beijing's plans to increase infrastructure spending.
On the Dalian Commodity Exchange, the most-traded iron ore rose 1.3 percent to 665 yuan per tonne, after earlier touching 638.50 yuan, its weakest since Feb. 10.
Imported iron ore stocks at major Chinese ports stood at 130 million tonnes on Friday, down 50,000 tonnes from the previous week, when they were at their highest since at least 2004, the year SteelHome consultancy began tracking this data. SH-TOT-IRONINV
"Given China's iron ore inventory has reached a high level, the import demand in (the) future may start to fall," OCBC Bank wrote in a note.
Many traders say, however, that the bulk of the port stocks are lower grade iron ore, and most Chinese steel mills prefer to use higher grade material to boost their productivity, keeping demand intact for top-quality cargoes from Australia and Brazil.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB was little changed at $86.72 a tonne on Friday, according to Metal Bulletin. The spot benchmark dropped 5 percent last week, its largest such loss since November. ($1 = 6.9070 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)