* Iron ore prices may fall further amid oversupply-CISA
* Shanghai rebar steady, but up nearly 2 pct on week
By Manolo Serapio Jr
SINGAPORE, Oct 12 (Reuters) - Spot iron ore prices in topimporter China steadied on Friday after a rally earlier thisweek spurred caution among buyers worried demand in the world'stop steel consumer might not rebound significantly.
But iron ore is up 11 percent so far for the week, its bestshowing in a month after prices surged earlier this week asChinese steel mills replenished stockpiles after a week-longholiday.
"I think the Chinese guys that were caught short have nowcovered and that if there is much on tender today it will go atweaker numbers and we will end the week on a softer note," saidJamie Pearce, head of iron ore brokering at SSY Futures, part ofthe shipbroking group Simpson Spence and Young.
Price offers for imported iron ore cargoes in China,including those from top supplier Australia, were unchanged onFriday, traders said.
Benchmark 62-percent grade iron ore
fell 1.6percent to $115.80 a tonne on Thursday, after hitting an 11-weekhigh of $117.70 on Wednesday, according to data provider SteelIndex.
Prices for iron ore cargoes sold by miners Vale
and BHP Billiton
have dropped over the past twodays after rising in the previous two as mills became reluctantto chase prices higher, traders said.
"It will be interesting to see how it develops next weekbecause it could be a case of whoever shows their hand firstwill set the tone for the market," said Pearce.
Despite recent gains in both futures and spot steel prices,analysts and traders say there hasn't been a meaningful reboundin end-user steel demand in China so far, with uncertaintyhanging over a market waiting to see whether Beijing willunleash more economic stimulus and what's ahead for the countryafter the once in a decade leadership transition next month.
"It's very sentiment driven at the moment and we are seeinga lot of mixed sentiment," said Pearce.
The most active rebar contract for January delivery on theShanghai Futures Exchange
was little changed at 3,640yuan ($580) a tonne by 0510 GMT. Rebar, used in construction,hit a two-month high of 3,699 yuan on Wednesday and is up nearly2 percent for the week.
Since the middle of September, prices of steel products haveonly recovered slightly, with raw material cost also rising, theChina Iron and Steel Association (CISA) said on its website onThursday.
"The heavy losses facing a large number of steel enterprisesare unlikely to improve in the coming period, and iron oreprices remain in a downward trend," the industry group said.
With China's steel production falling and iron ore inoversupply, CISA said there remains room for iron ore prices todecline.
China's average daily crude steel output dropped 0.7 percentto 1.843 million tonnes between Sept 21-30, compared to thepreceding 10 days, CISA data showed.
For all of September, average daily steel output fell to1.858 million tonnes from 1.894 million tonnes in August.
Shanghai rebar futures and iron ore indexes at 0510 GMT
Contract Last Change Pct ChangeSHFE REBAR JAN3 3640 +6.00 +0.17PLATTS 62 PCT INDEX 118.5 -0.25 -0.21THE STEEL INDEX 62 PCT INDEX 115.8 -1.90 -1.61METAL BULLETIN INDEX 117.67 -1.42 -1.19Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2770 Chinese yuan)
(Additional reporting by David Stanway in BEIJING; Editing byEd Davies)
Keywords: MARKETS IRONORE/