* Benchmark price hit one-month high on Monday
* On track to stretch winning streak to 8th day
* Majority of cargoes being purchased by traders
By Manolo Serapio Jr
SINGAPORE, June 19 (Reuters) - Spot iron ore prices rose on Tuesday, on track to lift the benchmark rate for an eighth straight day in what would be its longest winning streak in seven months, as traders bet on more Chinese mills replenishing stocks.
Price offers for iron ore cargoes from Australia to Brazil and India in top market China rose by up to $2 per tonne on Tuesday, traders said, after prices increased for most transactions on Monday.
That should boost further the price of benchmark 62-percent grade iron ore .IO62-CNI=SI which marked its seventh straight day of gains on Monday, matching a similar run in late February.
The price rose 0.7 percent to $136 a tonne, according to price provider Steel Index, the highest since May 14. A further rise on Tuesday will extend iron ore's winning run to an eighth day, the longest since mid-November.
"Traders are competing with one another to take cargo to have some material in hand for the likely situation where mills will come out looking to replenish further," said a Singapore-based physical iron ore trader.
"There's still business with mills, but majority of trades at the moment I'd say are being purchased by traders."
Top miner Vale is selling 250,000 tonnes of 63.9-percent grade iron ore at a tender that closes later on Tuesday, traders said. Vale sold 98,000 tonnes of 62.8-percent grade material at above $138 per tonne on Monday, slightly higher than a sale of a similar grade previously, traders said.
Vale also sold 182,352 tonnes of 65-grade iron ore at $148.25 a tonne via the platform run by China Beijing International Mining Exchange, over $2 more than a previous sale, the operator said on its website.
A fall in spot iron ore prices to two-week lows in early June lured buyers back into the market as Chinese steel mills restocked.
Despite sluggish demand, steel output in China, the world's biggest steel producer and consumer, remains high as mills opt for razor-thin margins over losing their market share to hundreds of others in the country's fragmented sector.
Chinese steel prices, as measured by rebar futures in Shanghai, are down more than 1 percent this year. Unless steel prices rebound, traders say the iron ore rally may soon hit a wall.
"It's difficult to think that we'll have much upside from $140. Something has to change in terms of Chinese macroeconomic policy or an uptick in steel demand that improves margins and allows for more room for iron ore to increase value," said another trader in Singapore.
"Otherwise I don't think you're going to see iron ore trading through $140 on its own steam."
The most-traded rebar contract on the Shanghai Futures Exchange was nearly flat at 4,130 yuan ($650) a tonne by the midday break.
Spot billet prices in China's key Tangshan area rose 30 yuan, or 0.8 percent, to 3,610 yuan per tonne on Monday, according to industry consultancy Umetal, which traders said may be due to tight supply, although overall steel demand remained soft.
Shanghai rebar futures and iron ore indexes at 0451 GMT
Contract Last Change Pct Change
SHFE REBAR OCT2 4130 +1.00 +0.02
PLATTS 62 PCT INDEX 138 +1.00 +0.73
THE STEEL INDEX 62 PCT INDEX 136 +1.00 +0.74
METAL BULLETIN INDEX 136.08 +0.83 +0.61
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3570 Chinese yuan)