* Dalian iron ore surges nearly 8 pct to three-week high
* Hebei plans to cut 32 mln tonnes of steelmaking capacity
By Manolo Serapio Jr
MANILA, Jan 10 Shanghai steel futures jumped
more than 5 percent to their highest price in nearly three weeks
on Tuesday, supported by promises from China's top steelmaking
province to further reduce production capacity.
Hebei, which accounts for about a quarter of China's total
steel output, plans to slash 31.86 million tonnes of steel and
ironmaking capacity this year, the official Xinhua news agency
reported on Sunday.
That would be more than double the 14.62 million tonnes of
steel capacity that Hebei cut last year.
"While smog concerns still threaten to lower steel output, a
drive to cut outdated steel capacity is also pressuring
production lower," Commonwealth Bank of Australia analyst Vivek
Dhar said in a note.
The most-active rebar on the Shanghai Futures Exchange
was up 5.5 percent at 3,123 yuan a tonne by 0320 GMT.
The construction steel product touched 3,138 yuan ealier, its
loftiest since Dec. 22.
A better outlook for the Chinese economy also bodes well for
steel prices, said Helen Lau, analyst at Argonaut Securities.
"Overall, the stable downstream demand and reduced supply
boost positive sentiment towards steel markets," said Lau.
China's economic growth last year was expected to be around
6.7 percent, said Xu Shaoshi, director of the National
Development and Reform Commission. Beijing had targeted growth
of 6.5-7.0 percent.
Rebar's rally lifted iron ore futures, also to their highest
in three weeks, and could help stretch gains for spot iron ore
Iron ore on the Dalian Commodity Exchange was last
up 6.9 percent at 588 yuan a tonne, just off a session high of
593 yuan and nearly hitting its 8 percent exchange-set limit.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
climbed 1.9 percent to $77.73 a tonne on Monday, according to
(Reporting by Manolo Serapio Jr.; Editing by Randy Fabi)