* Some investors expect supply curbs, improving demand
* But uncertainty over extent of demand recovery weighs on
* Iron ore weaker than steel due to increased supplies
(Adds details throughout, updates prices)
By Ruby Lian and Manolo Serapio Jr
SHANGHAI/MANILA, March 3 Chinese rebar steel
futures regained some lost ground on Friday, after slipping to a
one-week low earlier in the session, amid a cloudy outlook for
demand in the world's top consumer of the building material.
The most-active rebar on the Shanghai Futures Exchange
closed up 0.2 percent at 3,566 yuan ($517) a tonne
after touching a session low of 3,440 yuan, its lowest since
"Investors have cut positions to reap profit when the market
sentiment is mixed. However, I expect rebar to remain
fundamentally firm," said Xia Junyan, investment manager at
Hangzhou CIEC Trading Co in Shanghai.
Beijing has deepened its crackdown on small steel mills -
most of which mainly produce rebar and low-end products - in an
effort to slash surplus capacity. That has come during a
seasonal recovery in demand, helping to underpin prices.
Rebar is mainly used for construction, which usually starts
picking up during the spring in China as temperatures turn warm.
Some physical traders have increased restocking of rebar
over the past few weeks, but analysts have warned that traders
could end up with big losses if demand fails to improve.
"My concern is that there is a risk if traders are
restocking too much while real demand isn't picking up enough,"
said a futures trader in Shanghai.
Iron ore on the Dalian Commodity Exchange closed
1.5 percent lower at 688 yuan per tonne, after falling as much
as 4.9 percent to a three-week low of 664.50 yuan. The contract
dropped 2 percent for the week, its second weekly fall.
Iron ore is a primary ingredient of steelmaking, and steel
output curbs in some northern regions including in top
steel-making city Tangshan have reduced demand for the raw
"Iron ore is fundamentally weaker than steel due to
increased supplies from both domestic and overseas miners,"
CIEC's Xia said.
Spot iron ore prices have risen 17 percent this year, thanks
to China's booming steel market.
As iron ore stayed close to $100 a tonne, Chinese producers
are looking to reopen mines shuttered years ago, potentially
squeezing the market for marginal foreign suppliers to the
world's biggest importing country.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
rose 1.2 percent to $92.36 a tonne on Thursday, not far below a
30-month peak of $94.86 reached last month, according to data
from Metal Bulletin.
($1 = 6.8982 Chinese yuan)
(Reporting by Ruby Lian and Manolo Serapio Jr.; Editing by Tom
Hogue and Sherry Jacob-Phillips)