* Short-lived impact from China steel output cuts -Morgan
* Spot iron ore pulls back from 30-month high
(Recasts, updates prices)
By Manolo Serapio Jr
MANILA, Feb 16 Chinese iron ore futures slid
more than 2 percent on Thursday, reversing gains that pushed the
commodity to a record high, as steel prices made a similar
U-turn in afternoon trading.
Expectations of a pickup in construction activity and steel
supply tightening in China, the world's largest producer, have
helped steel prices rally this year, fueling a rapid rise in
iron ore markets.
The most-active rebar on the Shanghai Futures Exchange
closed down 0.9 percent at 3,381 yuan ($493) a tonne,
after earlier racing to a more than two-month high of 3,509
Iron ore on the Dalian Commodity Exchange dropped
2.4 percent to end at 685.50 yuan per tonne. The steelmaking raw
material touched 721 yuan in afternoon trading, its highest
intraday level since the exchange launched the futures contract
in October 2013.
Still, rebar has gained 16 percent so far this year and iron
ore has risen 26 percent.
To improve air quality during the annual meeting of the
National People's Congress in early March, governments in
Beijing, Tianjin and Hebei have released orders for steel mills
to cap production from late February to early March, Chinese
commodities firm Xiben New Line reported.
The Beijing-Tianjin-Hebei region produced around 210 million
tonnes of crude steel last year, or 26 percent of China's total
output, analysts at Morgan Stanley said in a note.
If half of steel production in the region is capped for 20
days, the decline in production could be 5.8 million tonnes,
"In this case, it may create short-term supply tightness and
hence price reactions, as demand recovers starting from late
February," they said.
"(But) overall, we expect the potential impact to be
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
dropped 0.7 percent to $91.05 a tonne on Wednesday, according to
It was the second straight day of decline for the spot
benchmark after touching a 30-month peak of $92.23 on Monday.
($1 = 6.8609 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Joseph Radford and