* Shanghai rebar, Dalian iron ore hit downside limit

* Swaps slump, traders see spot iron ore heading to $100 or below

* Iron ore stocks in China swell to record 105 mln tonnes

By Manolo Serapio Jr

SINGAPORE, March 10 (Reuters) - Chinese steel and iron ore futures slumped to their lowest levels ever on Monday after a surprise drop in exports swung China's trade balance into deficit last month and amplified fears of a slowdown in the world's No. 2 economy.

China's exports fell 18.1 percent in February from a year ago, defying market expectation for an increase. The dismal numbers followed a series of factory surveys since the start of 2014 that point to weakness in economic activity as demand falters at home and abroad. ID:nL3N0M5048

The disappointing trade data weighed heavily on Chinese-traded commodities including copper and crude oil, although imports of most were up on the year. The weak exports suggested China's commodity import demand could shrivel in coming months as end-users draw down swollen inventories.

The losses in steel futures would pile more pressure on spot iron ore prices which dropped to the lowest in more than eight months on Friday. Iron ore swaps have slumped.

The most-traded rebar for October delivery on the Shanghai Futures Exchange SRBV4 was down 4 percent at its contract low of 3,221 yuan ($530) a tonne by midday, falling by its daily downside limit.

Iron ore for delivery in September on the Dalian Commodity Exchange DCIOU4 dropped almost 6 percent to 728 yuan a tonne, its weakest since the bourse launched iron ore futures on Oct. 18, also sliding by its daily floor.

"The China data shows there will be more difficult times ahead," said an iron ore trader in Shanghai.

Steel demand in China, the world's biggest consumer and producer, had been weak since the start of the year as a slowing economy curbs demand for the building material.

Construction activity which typically picks up from March is unlikely to spur a strong recovery in demand for steel as Beijing pursues economic expansion that is less driven by investment and more fuelled by domestic consumption.

Iron ore for immediate delivery to China .IO62-CNI=SI fell 2.3 percent to $114.20 a tonne on Friday, its weakest since June 26, according to data compiled by Steel Index.

Iron ore, China's top import commodity by volume and the biggest revenue earner for global miners Vale VALE5.SA , Rio Tinto RIO.AX and BHP Billiton BHP.AX BLT.L , has lost almost 15 percent this year, among the hardest hit commodities this year.

'MORE RELUCTANT'

The sustained slide in steel prices suggests more downside risk for iron ore, traders said.

"Mills are more reluctant to buy iron ore in this situation and we will see iron ore continue to drop in the next few days. We may break $100 in a very short time," said another trader in Shanghai.

A slump in iron ore to a three-year low of $86.70 in September 2012 shuttered many high-cost mines in China and forced global miners to rethink expansion and focus on cost cuts.

Iron ore swaps on Monday sustained further losses, suggesting investors are anticipating more declines in spot iron ore prices.

April iron ore swaps SGXIOSJ4 traded at $102.50 a tonne in early deals after settling at $108.56 on Friday, when it fell by almost $4, traders said.

Offers for April and May contracts ranged at just above $100, they said. The May contract SGXIOSK4 fell $4 to $107.94 on Friday.

The price slide comes after stockpiles of imported iron ore at Chinese ports rose to a fresh record of 105 million tonnes

SH-TOT-IRONINV on Friday, according to data from industry consultancy Steelhome.

China's iron ore imports rose 11.9 percent in February from a year earlier to 63.2 million tonnes, but down from a record high of 86.8 million tonnes in January. ID:nL3N0M41HD

The sustained increase in stockpiles reflected arrivals of iron ore contracted by Chinese mills under long-term deals with miners, traders said, as well as the growing use of the commodity as a loan collateral amid tight credit conditions.

ID:nL3N0LI19X

($1 = 6.1260 Chinese yuan)

(Editing by Tom Hogue)

((manolo.serapio@thomsonreuters.com)(+65 6870 3884)(Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net))

Keywords: MARKETS IRONORE/