Iron Ore-Spot clings near highest in more than 5 months

* Iron ore up near 7 pct in Q1; near highest in over 5 mths
* Iron ore prices make gains on strong China steel output
* Slow recovery in steel demand; rebar prices up 3 pct in Q1

(Updates rebar close price)
SHANGHAI, March 30 (Reuters) - Spot iron ore prices extended gains as strong
steel production in China sustained the upward momentum of the steelmaking raw
material, but further increases may be curbed as slow demand growth makes the
country's steel mills cautious.
Iron ore with 62 percent iron content .IO62-CNI=SI stood unchanged at
$147.7 a tonne on Thursday from the previous day, clinging to its highest in
more than five months. Iron ore has gained nearly 7 percent over the first
quarter of this year.
"I expect $150 a tonne will be the near-term peak for iron ore prices as
there is not much support from steel prices," said an iron ore trader in
Shanghai.
"Steel mills have plentiful iron ore inventories now and are taking a
cautious attitude in buying," he added.
Steel demand in China, the world's top consumer, is posting a slow recovery
in the traditional strong consuming season as Beijing pledges to keep tight
control over property, one of the largest users of steel, amid slowing economic
growth this year.
"We think China's steel industry will continue to suffer from thin margins
in 2012," Mirae Asset Securities in Hong Kong said in a research note. "Weak
end-user demand and capacity expansion from cost-efficient private steel mills
will continue to depress steel prices while helping iron ore and coke prices."
The most-traded October rebar contract on the Shanghai Futures Exchange
stood almost flat at 4,324 yuan ($690) a tonne by the close on Friday,
up 0.09 percent.
The slow recovery in steel demand drove rebar prices up around 3 percent
over the first quarter, far below the gains of the steelmaking ingredient during
the same period.
"I am not bullish on steel demand this year due to slower economic growth;
steel demand is currently driven by those projects under construction, but there
are not many new projects kicking off," said Wang Jin, an analyst with
Everbright Futures in Shanghai.

Shanghai rebar futures and iron ore indexes at 0735 GMT

Contract Last Change Pct Change
SHANGHAI REBAR* 4324 4.00 0.09
PLATTS 62 PCT INDEX 149.75 0.00 0.00
THE STEEL INDEX 62 PCT INDEX 147.7 0.00 0.00
METAL BULLETIN INDEX 147.55 0.50 0.34

*In yuan/tonne
#Index in dollars/tonne, show close for the previous trading day
($1 = 6.3060 Chinese yuan)

(Reporting by Ruby Lian and Fayen Wong; Editing by Sugita Katyal)