* Dalian iron ore futures headed for third monthly increase
* Macquarie ups Q3 iron ore forecast to $73 from $50
* Spot iron ore at two-week low, but on track for monthly gain
By Manolo Serapio Jr
MANILA, Aug 31 (Reuters) - Chinese rebar steel futures trimmed losses on Thursday and were on track to post their fourth monthly gain in a row after data showed growth in the country’s manufacturing sector sped up in August, underpinning the outlook for steel demand.
Iron ore futures edged higher and were also on course to end August higher, rising for a third straight month.
China’s Purchasing Managers’ Index rose to 51.7 this month from July’s 51.4, topping market expectations and staying well above the 50-point mark that separates growth from contraction on a monthly basis.
“We think this positive development in China’s economy is a tailwind for commodity demand, which should not be underestimated any more,” Argonaut Securities analyst Helen Lau said in a note.
The most-active rebar on the Shanghai Futures Exchange was down 0.6 percent at 3,834 yuan ($581) a tonne by 0215 GMT, but well off the session’s low of 3,782 yuan. The construction steel product has gained 8 percent this month.
Iron ore for January delivery on the Dalian Commodity Exchange, also the most-traded contract, was last up 0.6 percent at 555 yuan per tonne.
The steelmaking raw material has risen nearly 5 percent in August.
Amid fatter margins, Chinese steel producers have boosted steel production and restocked on raw materials, prompting investment bank Macquarie to upgrade its iron ore price forecast for the third quarter to $73 from $50.
“As long as steelmaking margins remain wide, mills have little incentive to tap into the ample supply of lower-grade ore sitting at ports, and a destocking cycle is increasingly unlikely,” Macquarie said in a report.
But the bank sees iron ore easing to $65 in October-December on the back of rising seaborne supply.
“Given a slowing real estate sector in China, our view remains that high-cost supply will need to be displaced as we move towards 2018,” it said.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slipped 0.4 percent to $76.08 a tonne on Wednesday, the lowest since Aug. 17, according to Metal Bulletin.
The spot benchmark is on course for a third consecutive monthly increase, but the August gain of 3.2 percent so far was a fraction of last month’s 13.5 percent spike. ($1 = 6.5978 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Sunil Nair)