Iron Ore now at major ~30month supportShanghai rebar extends losing streak to 8th day
* Shanghai rebar has dropped 4.4 pct in 8 sessions
* China steel demand growth to slow in near future-CISA
* Australia ups iron ore output, exports forecasts
By Manolo Serapio Jr
MANILA, Sept 20 (Reuters) - China steel futures dropped for an eighth straight day to hit their lowest in six weeks on Tuesday on growing concern demand in the world's biggest consumer was slowing, which could prompt mills to curb output after producing at a rapid pace.
China's daily steel output has averaged above 1.9 million tonnes since late February, versus 1.7 million tonnes in 2010, as mills cashed in on a construction boom supported by the country's bid to build more affordable homes.
But with the social housing project this year nearing completion and Beijing's monetary tightening campaign continuing, steel demand looks to be slowing.
"There's huge supply and demand is declining. It's not a good picture at the moment," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.
"In the future we are going to see some steel mills slow down on production."
The most-active January rebar contract on the Shanghai Futures Exchange dropped 0.2 percent to close at 4,611 yuan a tonne, after falling to as low as 4,585 yuan, its weakest since Aug. 9.
For the eight straight sessions to Tuesday, rebar has lost 4.4 percent.
China produced 1.964 million tonnes of crude steel a day on average on Sept. 1-10, up 3.1 percent from the preceding 11 days in August, data from industry group China Iron and Steel Association (CISA) showed last week.
Annualised, the output would stand at a record near 717 million tonnes.
Steel demand growth in China is expected to slow in the near future and prices will fluctuate in response to the gloomy global economy, CISA said in a monthly report released on Tuesday.
"Steel oversupply will hardly improve as steel output remains high amid slowing growth of steel-consuming sectors and growing difficulties in steel exports," CISA said.
SHORT-TERM FALLS
The weakness in steel prices has thinned appetite for iron ore, the key steelmaking ingredient, with index-based spot prices falling on Monday to their lowest since mid-August.
Platts' 62-percent grade iron ore index IODBZ00-PLT slipped 75 cents to $178.75 a tonne and a similar gauge by Steel Index .IO62-CNI=SI eased 40 cents to $177.50.
Metal Bulletin's iron ore index .IO62-CNO=MB dropped 10 cents to $176.94 a tonne.
Prices of iron ore forward swaps <0#SGXIOS:> also fell, reflecting investor expectations spot prices could ease further.
"I think we are seeing a bit of consolidation in the price," said Christopher Ellis, analyst with Metal Bulletin.
"Short-term falls in the iron ore spot price are likely to be just that. In the medium term prices will remain strong," said Ellis, citing firm Chinese demand and tight supplies from No. 3 exporter India.
Australia, the world's biggest iron ore supplier, lifted its projections for output and exports on Tuesday, defying concerns over the global economy as Asian demand roars along.
"Chinese steel consumption is rising and exports from countries like India are reducing because they're using a lot more internally. So the pricing environment looks relatively positive going forward," said James Wilson, analyst at RBS Morgans.
Hoping to gain more pricing power over the steelmaking raw material, industry group CISA said it plans to publish its own weekly iron ore price index from next month. (Additional reporting by Ruby Lian in Shanghai; Editing by Himani Sarkar)
