* Steel futures drop to lowest since July 26
* Iron ore hits lowest since July 27
* Demand yet to seasonal pick-up - traders
* Iron ore inventories remain high
SHANGHAI, Sept 12 Chinese steel futures fell to
a 7-week low on Monday amid few signs of a pick-up in demand in
the world's top producer and consumer despite expected seasonal
strength, while worries over a possible U.S. rate hike dampened
commodities more broadly.
The most active rebar futures contract on the Shanghai
Futures Exchange dropped more than 2 percent to 2,276
yuan a tonne by 0300 GMT, its lowest since July 26. It traded
1.9 percent lower at 2,281 yuan ($341.52) by the midday break.
Steel demand traditionally picks up in September after the
summer slowdown, but actual demand has failed to show a recovery
since August amid a cooling economy and the suspension of some
construction activity for the G20 summit.
"Real demand in August was not as good as July and the G20
summit in Hangzhou hit consumption, so let's see if demand will
grow in September," said Li Wenjing, an analyst with Industrial
Futures in Shanghai.
On the Dalian Commodity Exchange, the benchmark iron ore
futures contract fell 1.7 percent to 399 yuan a tonne
by the midday break. It earlier hit a session low of 396.5 yuan
a tonne, the lowest since July 27.
Iron ore port inventories CUS-STKTOT-IORE fell 2 percent
to 103.75 million tonnes by last Friday, but remain at high
levels, sticking above 100 million tonnes since July, industry
website Umetal.com showed.
Chinese commodities fell across the board amid expectations
that U.S. could consider a rate rise later this month. U.S.
Federal Reserve official are divided on whether a rate rise is
in the offing, with some of the permanent voting members
appearing wary of supporting an immediate hike.
($1 = 6.6790 Chinese yuan renminbi)
(Reporting by Ruby Lian and Josephine Mason; Editing by Richard