* Steel and iron ore futures at 7-week lows
* Steady supply, slow demand pick-up hurt expectation
* China August steel output rises for 6th straight month
SHANGHAI, Sept 13 Chinese steel futures
stretched losses to a seven-week low on Tuesday on worries over
demand in the world's top producer, dragging down prices of raw
material iron ore.
Concerns over a slow recovery in demand after the summer
construction lull amid steady supplies of steel have raised
concerns that prices could come under further pressure.
"The rise in August was driven by expectations that demand
would pick up in September but the reality is we haven't seen
any boost in buying for now," said Xia Junyan, an investment
manager of Hangzhou CIEC Trading Co in Shanghai.
China has made increased efforts to cut steel overcapacity,
toughening its stance in an environmental crackdown and shutting
many smaller mills. However, analysts expect the government will
work to meet its annual target, but won't exceed it.
"The production interruptions lifted sentiment earlier, and
now the market does not have any stories to trade," Xia said.
China promised to slash steel capacity by 45 million tonnes
this year and cuts in the first seven months of the year
amounted to 47 percent of the annual target, spurring Beijing to
vow to quicken its pace.
The most active futures contract for construction product
rebar on the Shanghai Futures Exchange hit a session
low of 2,264 yuan ($339.38) a tonne, its lowest since July 25.
It traded 1.8 percent lower at 2,265 yuan by the midday break.
China's crude steel output rose 3 percent in August from a
year ago, the sixth straight monthly rise and the latest sign
that a rally in prices and pick-up in demand spurred mills in
the world's top producer to ramp up output.
On the Dalian Commodity Exchange, the benchmark iron ore
futures contract fell 3.1 percent to 392.5 yuan a
tonne by midday, earlier touching its lowest since July 27.
($1 = 6.6798 Chinese yuan renminbi)
(Reporting by Ruby Lian and Josephine Mason; Editing by Richard