UPDATE 1-Iron ore eyes 3rd weekly drop, more losses seen on rising supply

* Spot iron ore has fallen 15 pct from 9-month high in March

* Australia ups 2016 iron ore average price forecast to $45/tonne (Updates futures prices)

MANILA, April 8 (Reuters) - Spot iron ore was set to post its third weekly drop on Friday, pressured by supply that is likely to rise further in the months ahead while demand from top buyer China is expected to be tepid.

The price of the steelmaking raw material has dropped 15 percent from a nine-month high above $60 a tonne in March, struggling to scale higher at the start of the second quarter.

“We still believe the fair price is around $45,” said Gunjan Aggarwal, analyst at consultancy CRU in Mumbai.

That price estimate is the same as what top iron ore exporter Australia is looking at for this year. The country’s Department of Industry, Innovation and Science’s estimate is up from a December forecast of $40.40.

“While global iron ore demand is projected to remain relatively flat, continued displacement of domestically produced iron ore in China with seaborne iron ore is expected to result in a modest increase in international trade,” the agency said.

CRU’s Aggarwal expects supply, particularly from Australia, to increase in May and June as miners make up for lower volumes during rains-related disruptions in the first quarter.

“They will be looking to increase volumes to meet their fiscal targets for the financial year that ends in June. And demand is pretty much the same where it is,” Aggarwal said.

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI was unchanged at $53.80 a tonne on Thursday, according to The Steel Index. The spot benchmark was down 0.4 percent for the week.

There was limited trading in the spot iron ore market this week, traders said, as stocks at Chinese ports which stand at a one-year high of 97 million tonnes SH-TOT-IRONINV curbed buying appetite.

In the futures market, the most-traded September iron ore on the Dalian Commodity Exchange closed 0.1 percent lower at 377 yuan a tonne.

On the Singapore Exchange, June iron ore slipped 1 percent to $49.09 a tonne.

The most-active October rebar on the Shanghai Futures Exchange edged up 0.4 percent to 2,196 yuan per tonne.

$1 = 6.4780 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar and Subhranshu Sahu