* Shanghai rebar up 19 pct in Q1, Dalian iron ore gains 20
* Spot iron ore up 3.7 pct in Q1 vs 41 pct surge in Q4
* China's steel restocking cycle nearly over - CBA
(Adds China steel PMI, iron ore port inventory, updates prices)
By Manolo Serapio Jr
MANILA, March 31 Chinese iron ore futures fell
nearly 3 percent on Friday and dropped for the month as steel
prices erased gains amid worries that the steel-restocking
period in the world's top consumer may be nearly done and
surplus risks are rising.
The weakness in iron ore futures has pulled down spot prices
by nearly 14 percent from this year's peak. Spot prices are also
under pressure by surging stockpiles of the raw material at
China's ports that are now the biggest in at least 13 years.
The most-active rebar on the Shanghai Futures Exchange
closed little changed at 3,152 yuan ($458) a tonne,
after peaking at 3,224 yuan earlier in the session.
The construction steel product rose 19 percent in the first
quarter, thanks to a rally driven by hopes of stronger Chinese
infrastructure spending and Beijing's campaign to reduce excess
But Commonwealth Bank of Australia analyst Vivek Dhar said
the bank continues to believe that "markets are pricing in
overly optimistic projections on Chinese steel consumption this
"China's steel restocking cycle is nearly over so oversupply
risks are increasing," Dhar said in a note.
Activity in China's steel industry expanded at a slower pace
in March even as mills continued to ramp up output, an industry
China's steel demand is expected to fall 1.9 percent this
year to 660 million tonnes, pressuring iron ore prices, Li
Xinchuang, vice chairman of the China Iron and Steel
Association, said on Thursday.
The most-traded iron ore on the Dalian Commodity Exchange
slid 2.8 percent to end at 552 yuan per tonne. It
climbed 20 percent in January-March quarter, backed by steel's
rally, but lost 9.5 percent this month.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
dropped 0.6 percent to $81.78 a tonne on Thursday, according to
Metal Bulletin. The spot benchmark has risen 3.7 percent in the
first quarter, a fraction of its 41 percent increase in
Supply from higher cost producers including in China has
risen this year and Commonwealth Bank's Dhar expects iron ore to
fall from current levels over the next six months and average
$60 during the quarter ending in December.
Inventory of imported iron ore at China's ports reached
132.45 million tonnes on March 24, SteelHome consultancy said,
the highest since it began tracking the data in 2004.
That would make about 95 million tonnes of steel, enough to
build Paris's Eiffel Tower nearly 13,000 times over.
($1 = 6.8896 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Christian
Schmollinger and Sherry Jacob-Phillips)