* China port stocks have fallen for three straight weeks
* Spot iron ore closes in on $80/tonne
* Shanghai rebar steady just below 4-1/2-year high (Updates prices)
By Manolo Serapio Jr
MANILA, Aug 22 (Reuters) - Chinese iron ore futures surged nearly 5 percent to their strongest level in more than five months on Tuesday as falling stockpiles of the steelmaking raw material at the country’s ports reflected firm demand.
The sustained rally in futures should push up bids for physical iron ore cargoes, as spot prices close in on $80 a tonne.
The most-traded iron ore on the Dalian Commodity Exchange rose as far as 609.50 yuan ($92) a tonne, its loftiest since March 16. It closed up 4.2 percent at 606 yuan.
Inventory of imported iron ore at China’s major ports fell for a third consecutive week to 135.2 million tonnes on Friday, the lowest since mid-May, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV
“Steel mills appear to be happy to continue restocking, with iron ore stockpiles continuing to fall,” ANZ analysts said in a note.
Daily drawdowns of iron ore from China’s ports have surged to almost 3 million tonnes, the highest so far this quarter, Macquarie analysts said, adding it points to “continuous robust demand from mills while arrivals from Australia tumbled”.
Maintenance of railway tracks and weather-related disruptions, they said, have led to some delays of iron ore shipments from Australia, the world’s biggest supplier.
Iron ore prices have benefited from the rally in steel prices this year, although steel has far outpaced gains in the raw material.
The most-active rebar on the Shanghai Futures Exchange touched a 4-1/2-year high of 4,016 yuan a tonne on Aug. 10 and has gained 54 percent this year. The construction steel product closed 0.5 percent higher at 3,933 yuan on Tuesday.
Dalian iron ore futures have risen 37 percent this year.
The rally in iron ore futures came even as the Dalian exchange limited the size of positions taken in some contracts by non-member firms as the bourse acted to tame speculative trading. The cap took effect on Tuesday.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB climbed 2.4 percent to $79.81 a tonne on Monday, the highest since April 6, according to Metal Bulletin. ($1 = 6.6551 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Kenneth Maxwell and Sunil Nair)