Iron Ore-Prices hit new 8-month top as rebar futures firm

* Shanghai rebar at two-month high on rising cost

* Indian iron ore offers stay above $180/tonne

* China iron ore imports at nine-month high in Dec (Updates Shanghai rebar prices)

By Manolo Serapio Jr

SINGAPORE, Jan 10 (Reuters) - Shanghai rebar futures rose to two-month peaks on Monday, showing that iron ore prices have room to keep recent gains as Chinese demand lifted key indexes to their highest since May.

Chinese steel mills, the biggest buyers of the world's iron ore, have been replenishing stocks of the steelmaking raw material ahead of the Lunar New Year in February, with stronger steel prices also supporting the buying binge.

"Steel prices are increasing because traders are boosting their stocks of steel products and raw material costs, like coal, are rising," said an iron ore trader in Rizhao in China's eastern Shandong province.

Steelmakers across Asia have been raising product prices to meet a projected increase in coking coal prices to around $300 a tonne, the highest in two years, as supply from top exporter Australia had been disrupted by massive floods.

The most active May rebar contract on the Shanghai Futures Exchange hit a high of 4,851 yuan per tonne, a level last seen on Nov. 11, before closing at 4,834 yuan, up 0.9 percent.

Firmer steel prices supported iron ore despite concerns that the coking coal shortage would impact iron ore demand.

"The marginal buyers in the spot iron ore market tend to be small Chinese mills, which are not exposed to the Queensland situation for their coal supply and whose domestic coal price has seen limited movement," Macquarie said in a note.

"With steel prices and production levels continuing to rise in China, these mills have capacity to pay more for iron ore in the short term, and thus there is a strong chance the spot price could continue pushing upward until Chinese New Year."

CHINA IMPORTS

China's iron ore imports rose 1.2 percent from the previous month to 58.08 million tonnes in December, the highest in nine months.

Imports for all of 2010 dropped 1.4 percent to 618.6 million tonnes, in line with industry estimates, although a Reuters' poll of analysts last month showed the country's iron ore imports would rebound to a record level this year along with its crude steel output.

Indian ore with 63.5 percent iron content continued to be offered at $181-$182 a tonne, including freight, on Monday, traders said.

All the three major iron ore indexes touched new eight-month highs at the close of trade on Friday.

The Platts 62 percent iron ore index IODBZ00-PLT rose $1 to $175.50 a tonne, cost and freight, and the Steel Index 62 percent benchmark .IO62-CNI=SI climbed $1.3 to $172.60.

Metal Bulletin's 62 percent gauge .IO62-CNO=MB jumped more than $2 to $171.43.

Forward swaps retreated as investors locked in recent sharp gains.

The January contract , cleared by the Singapore Exchange, slipped $1.50 to $173 a tonne and the February contract fell $2.20 to $170.50. March dropped nearly $3 to $168.88.

(Editing by Ed Lane)