* China iron ore port stocks reach 111.55 million tonnes
* Current iron ore price above $60/T not justified -
By Manolo Serapio Jr
MANILA, Dec 19 Iron ore futures in China tumbled
as much as 5 percent on Monday, extending losses to a fourth
session in a row, as stocks of the steelmaking raw material at
the country's ports rose to the most in more than two years.
Inventory of iron ore at major ports in China, the world's
top importer, hit 111.55 million tonnes as of Dec. 16, the
highest since September 2014, according to data tracked by
industry consultancy SteelHome. SH-TOT-IRONINV
Spot iron ore prices have surged 87 percent this year,
snapping a three-year decline, mainly due to the strength in
China's steel market. The spot benchmark .IO62-CNO=MB touched
$83.58 a tonne on Dec. 12, the strongest since October 2014.
But analysts say with steel prices largely spurred by
China's campaign to address excess capacity, iron ore demand
could weaken eventually.
"Iron ore prices have remained disconnected to the
fundamentals in our view since late October, ranging from
$60-$83/tonne despite clearly abundant supply of iron units,"
Macquarie analysts said in a note.
"We still believe iron ore supply remains abundant with
prices above $60/tonne, and with Chinese mine costs lower in
U.S. dollar terms given recent yuan depreciation, we do not see
a return of cost inflation in iron ore mining which justifies
prices anywhere near current levels."
The most-traded iron ore on the Dalian Commodity Exchange
fell as much as 5.1 percent to 573 yuan ($83) a tonne,
and was down 3.7 percent at 581.50 yuan by midday.
Weaker futures could drag spot iron ore back below $80 a
tonne if bids consequently drop in the physical market, traders
say. Iron ore for delivery to China's Qingdao port
.IO62-CNO=MB was nearly unchanged at $81.49 a tonne on Friday
and was also flat for the week, according to Metal Bulletin.
The most-active rebar on the Shanghai Futures Exchange
was down 3.2 percent at 3,254 yuan a tonne, also
slipping for a fourth consecutive session.
($1 = 6.9444 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar)