* Dalian iron ore rises over 2 pct, tracking steel
* China curbs may cool steel demand from property market
By Manolo Serapio Jr
MANILA, June 16 Chinese steel futures rose
sharply for a third day in a row on Friday, supported by
government efforts to tackle a glut, even as the outlook for
demand in the world's top steel consumer may not be too
promising, particularly from its property sector.
China said on Thursday that it had cut 42.4 million tonnes
of steel capacity by end-May, representing 85 percent of its
capacity reduction target this year.
The most-active rebar on the Shanghai Futures Exchange
was up 2.1 percent at 3,145 yuan ($462) a tonne by 0214
GMT, adding to Thursday's nearly 4 percent spike.
The construction steel product has risen about 5 percent so
far this week, on course for its biggest weekly increase in a
But Julius Baer analyst Carsten Menke said the outlook for
steel demand from China's property sector is "not very
promising" with state efforts to cool the market likely to
reduce activity over the coming months.
China has been restricting real estate purchases across its
cities to keep speculation in check and curb soaring prices,
with banks also tightening loans to the sector.
"Adding to this, steel consumption is approaching the
seasonal peak, which should lead to falling production over the
coming months and weigh on the steel mills' demand for iron
ore," Menke wrote in a note.
The strength in steel prices helped lift raw material iron
ore, with the most-traded iron ore contract on the Dalian
Commodity Exchange up 2.4 percent at 433 yuan per
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
rose 1.5 percent to $55.23 a tonne on Thursday, according to
The spot benchmark, which hit a one-year low on Tuesday, has
gained 1.5 percent this week, following a three-week decline.
Menke said rising low-cost supply from top exporters
Australia and Brazil should keep the iron ore market "in
oversupply and prices should continue to slide over the coming
"As prices have returned to fundamentally justified levels
faster than expected, we lower our 3- and 12-month targets to
$55 and $50 per tonne. We maintain a cautious view on both iron
ore and steel."
($1 = 6.8117 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)