* Shanghai rebar rises the most in two months
* Underlying steel demand in China remains healthy -
By Manolo Serapio Jr
MANILA, May 17 Iron ore futures in China jumped
nearly 4 percent on Wednesday, tracking gains in steel prices,
with declining steel inventories indicating firm demand as
Beijing sustains a campaign to curb excess supply.
The most-traded iron ore contract on the Dalian Commodity
Exchange was up 3.9 percent at 474.50 yuan ($69) a
tonne by 0209 GMT, recovering further from Monday's four-month
Rebar on the Shanghai Futures Exchange rose 3
percent to 3,072 yuan per tonne, on track for its biggest
single-day spike since mid-March.
Inventory of steel products held by Chinese traders has
fallen 17 percent this year to 11.2 million tonnes as of May 12,
said Argonaut Securities analyst Helen Lau.
"Therefore, the underlying real steel demand remains
healthy," Lau wrote in a note.
Along with China's efforts to tackle a glut, analysts said
demand was expected to improve, especially for long steel
products for construction.
China said on Monday that 31.7 million tonnes of steel
capacity have closed so far this year, 63 percent of the target
for 2017. That would be on top of Beijing's earlier pledge to
shut all producers of low-quality steel products by the end of
June as it fights pollution.
Still, China produced a record 72.78 million tonnes of crude
steel in April.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB
rose 0.6 percent to $61.17 a tonne on Tuesday, according to
($1 = 6.8843 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Miral Fahmy)