* Dalian iron ore, Shanghai rebar hit multi-year highs this
* Spot iron ore could still top $100/tonne - CMC Markets
(Updates prices, adds Vale's outlook)
By Manolo Serapio Jr
MANILA, Feb 24 China's iron ore futures dropped
more than 2 percent on Friday after a rapid rally underpinned by
expectations that strong infrastructure spending would spur
steel demand in the world's top consumer.
The fall pulled iron ore futures further away from a record
high reached earlier in the week, and should similarly drag down
spot prices, which have climbed to multi-year highs near $100 a
The most-traded iron ore on the Dalian Commodity Exchange
closed down 2.4 percent at 698.50 yuan ($102) a tonne,
but well off the session's low of 674 yuan.
The contract, which hit a record high of 741.50 yuan on
Tuesday, lost 1 percent for the week.
"The size of today's move does reflect the speed with which
iron ore has risen. But I suspect we will find a base over the
next session or two before moving higher again," said Michael
McCarthy, chief market strategist at CMC Markets.
For some investors, it's "a shorting opportunity looking for
a more normal iron ore price," he said.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
fell 3.1 percent to $91.34 a tonne on Thursday, according to
Metal Bulletin. The spot benchmark, which hit a 30-month peak of
$94.86 on Tuesday, was still up 1.1 percent so far this week.
"The underlying supply-demand (condition) is supportive of
higher prices in my view. I wouldn't be surprised to see an iron
ore price above $100 a tonne," said McCarthy.
Top iron ore miner Vale said it expects the raw
material to average above $80 this year on increased steel
Iron ore prices have tracked the rally in China's steel
market that had been supported by hopes of a pickup in
construction activity from next month as well as Beijing's
efforts to boost infrastructure investment to spur the economy.
"While we continue to believe that steel and iron ore prices
are factoring in overly optimistic demand projections, China is
likely to keep infrastructure investment, particularly
transport, supported to shore up growth before elections in
November," Commonwealth Bank of Australia analyst Vivek Dhar
said in a note.
The most-active rebar on the Shanghai Futures Exchange
dropped 0.4 percent to end at 3,498 yuan a tonne, after
falling as far as 3,373 yuan earlier. It hit a three-year high
of 3,630 yuan on Tuesday.
($1 = 6.8719 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Amrutha Gayathri
and Subhranshu Sahu)