SINGAPORE– Spot iron-ore prices fell to one-month lows and were headed for a second straight week of losses, as buying interest from top importer China thinned amid high stockpiles of steel products, reflecting slow demand.Shanghai steel rebar futures dropped 1.8% on Friday as investors sold off most commodities after data showed that China's factory activity cooled to five-month lows in February as domestic and overseas demand slackened.

Inventory of five major steel products held by Chinese traders, including rebar, stood at 18.8-million tons as of February 22, according to data compiled by Bank of America-Merrill Lynch.

That was up from 12.5-million tons in early January, based on the data. Steel stockpiles in China usually peaked in February as producers boosted output ahead of demand picking up from March, when construction and manufacturing activity were in full swing.

But there were concerns that the pickup may be slow this time given the modest pace in China's economic recovery.

The inventory of steel billet in China's key Tangshan area was reportedly at two-million tons, far more than the normal inventory of 400 000 t, said a trader in Hong Kong.

The most active October rebar contract on the Shanghai Futures Exchange was down 1.8% at 3 982 yuan a ton, or $640/t by the midday break.

The current weak demand for steel was compounded by worries about China's renewed push to cool its property sector, which could dent consumption further.

Beijing said last week that it would extend a property tax scheme to more cities and urged local authorities to set price control targets on new homes which could curb the need for steel producers to buy iron-ore.

Iron-ore with 62% iron content for immediate delivery to China dropped 0.1% to $151.70/t on Thursday, the lowest since January 30, based on data from Steel Index.

The price, down 1.2% so far this week, dropped half a percent in February after gaining more than 30% over the previous two months, as Chinese demand slowed amid signals that the economy was only seeing a mild recovery.

"Mills are not in a mood to buy at the moment, although I think there is still demand because no one has cut (steel) production yet," said a physical iron-ore trader in Shanghai.

"But in a down market mills always want to wait and see."

China's daily output of crude steel averaged 2.01-million tons between February 11 and February 20, up nearly 1%  from the previous 10-day period, industry data showed earlier this week.

Iron-ore swops were similarly weak on Friday, with the Singapore Exchange-cleared March contract traded at $146.50/t after settling at $148.33 the previous day, traders said.