* Dalian iron ore has surged 170 pct this year
* Spot iron ore on track for best year since at least 2008
By Manolo Serapio Jr
MANILA, Dec 23 Steel and iron ore futures in
China headed south on Friday amid weak winter demand, but both
commodities were well on track to post their biggest annual
gains on record after this year's searing rally.
Strong futures helped lift spot iron ore prices by more than
70 percent this year, putting the steelmaking raw material on
course for its best year since at least 2008.
But prices were weaker on Friday as steel demand softened,
with construction activities slowing down with winter.
Authorities in the city of Tangshan in China's top
steelmaking province of Hebei have lifted production
restrictions on steel mills, a Shanghai-based trader said, as
skies have cleared after thick smog was suspended in the air for
several days this week.
That could lift steel output at a time when traders'
appetite has waned.
After a restocking binge that lifted prices of both steel
and iron ore, "steel traders have become reluctant to taking
more cargoes because end-user demand is not that strong and they
also have enough inventory," said the Shanghai trader.
The most-active rebar on the Shanghai Futures Exchange
was down 3.4 percent at 3,004 yuan ($432) a tonne by
The construction steel product touched a 32-month peak last
week and has gained 68 percent so far this year, spurred by
Beijing's campaign to slim its bloated steel sector and efforts
to stimulate its economy.
Iron ore on the Dalian Commodity Exchange slipped
1.9 percent to 548 yuan a tonne. But it has surged 170 percent
this year having touched a nearly three-year high last week.
Spot iron ore touched a two-year high above $80 a tonne at
the same time that futures rallied, bringing this year's annual
gain to 75 percent so far.
As futures retreated this week, iron ore for delivery to
China's Qingdao port .IO62-CNO=MB slid 3.8 percent to $76.15 a
tonne on Thursday, according to Metal Bulletin. The annual gain
follows a three-year decline and is on course to be the largest
since Metal Bulletin began assessing prices in 2008.
While this year's spectacular rebound in iron ore prices has
been a godsend for the world's biggest miners, it has not gone
high enough for smaller, less-efficient producers that still
have pits shuttered and equipment idle.
Demand for iron ore may remain mostly weak towards the Lunar
New Year in late January, said the Shanghai trader.
($1 = 6.9499 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Christian