* Steel, raw materials steady amid lukewarm spot trade
* Chinese steel market returns to a healthy “new normal” -Jefferies
* Rebar margins stand at 10-year high
BEIJING, May 10 (Reuters) - China’s iron and steel market wobbled to find a direction on Thursday as spot trading continued to be dull, although analysts held onto a positive outlook for the world’s largest steelmaking country.
The most-active construction rebar futures on the Shanghai Futures Exchange were little changed in earlier trading. It was down 0.3 percent at 3,583 yuan ($562.67) a tonne, as of 0200 GMT.
Spot steel products extended losses into a fourth session on Wednesday, down 0.4 percent at 4,291.24 yuan a tonne, according to Mysteel consultancy data.
Benchmark Tangshan billet dropped 40 yuan to 3,550 yuan a tonne as traders took a cautious stance amid a tepid market.
“Chinese steel market is returning to a healthy ‘new normal’ as demand in Spring has emerged strong enough to simultaneously absorb increased production as winter restriction concludes ... and will push steel prices back to their February peak and margins to multi-year highs,” said brokerage Jefferies in a note.
Profit margins for rebar-making touched 608 yuan a tonne in April, up more than 40 percent compared with a month ago, Mysteel data showed, while Jefferies had estimated rebar margins to hit a 10-year high of $134 per tonne.
Iron ore futures on the Dalian Commodity Exchange struggled to find a direction, slipping less than 0.5 percent to 470 yuan a tonne.
Benchmark iron ore for delivery to China’s Qingdao port .IO62-CNO=MB fell 0.3 percent to $66.46 a tonne on Wednesday, according to Metal Bulletin.
Dalian’s coke for September delivery climbed 0.2 percent to 2,000 yuan a tonne. The most-traded coking coal futures gained 0.4 percent to 1,238.5 yuan a tonne.
“Seasonal momentum push from downstream demand is waning, while supplies from mills have been increasing. However, with the ongoing supply-side reform and environmental crackdown, output expansion would be restrained and margins could be guaranteed,” said Xu Bo, analyst, Haitong Futures.
$1 = 6.3679 Chinese yuan Reporting by Muyu Xu and Josephine Mason, Editing by Sherry Jacob-Phillips