Iron ore slumps on uncertainty over China demand recovery

Aug 10 (Reuters) - Benchmark iron ore futures fell on Wednesday, with Dalian prices retreating from an eight-day peak, as uncertainty over demand prospects in top steel producer China kept traders cautious.

The most-traded iron ore, for delivery in January next year, on China's Dalian Commodity Exchange DCIOcv1 dropped as much as 3.2% to hit 713.50 yuan ($105.59) a tonne.

On the Singapore Exchange, iron ore's front-month September contract SZZFU2 was down 0.4% at $109.15 a tonne.

Other steelmaking inputs also fell, with Dalian coking coal DJMcv1 down 3.7% and coke DCJcv1 shedding 3.1%.

Iron ore had rebounded from seven-month lows seen in early July, as steel demand from China's construction industry picked up, lifting prices and margins and prompting mills to restart some of their idled blast furnaces.

But analysts said higher costs of steelmaking inputs have cast doubts about the sustainability of margins improvement, and could eventually restrain mills from restarting other blast furnaces.