2 Min Read
* Shanghai rebar drops to weakest since February
* Spot iron ore falls to lowest since Nov, down 16 pct this year
By Manolo Serapio Jr
MANILA, April 18 (Reuters) - Iron ore futures in China fell more than 3 percent on Tuesday to their weakest level since January, pressured by a sustained drop in steel prices amid oversupply worries.
Shanghai rebar slipped to 10-week lows as output in the world's top steel producing country showed no signs of abating despite tepid demand and government efforts to cut capacity.
The most-traded iron ore on the Dalian Commodity Exchange was down 3.3 percent at 484 yuan ($70) a tonne by 0252 GMT, just off a session trough of 483 yuan, its lowest since Jan. 10.
The most-active rebar on the Shanghai Futures Exchange was down 2.7 percent at 2,854 yuan per tonne, also near its session low of 2,851 yuan, its weakest since Feb. 7.
"Oversupply concerns in China's steel market curbed demand" for raw material iron ore, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
China's crude steel output reached a record 72 million tonnes in March as mills ramped up output in anticipation of a pickup in demand that has remained slow, government data released on Monday showed.
A more than doubling in premium coking coal prices since Cyclone Debbie hit top producer Australia last month has also squeezed margins of Chinese steel mills, further reducing their appetite to purchase iron ore, wrote Dhar.
"In any case, steel market-related weakness will continue to push iron ore demand lower," he said, adding that iron ore supply is also rising, including from marginal exporters that responded to the early-year rally in prices. The bank has forecast iron ore to drop to $60 by the December quarter.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slid 3.5 percent to $66.25 a tonne on Monday, according to Metal Bulletin.
That was the lowest level since November for the spot benchmark which has lost 16 percent this year.
$1 = 6.8907 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Tom Hogue