* Dalian iron ore slumps to 2-1/2 month low
* Singapore iron ore rebounds in late trade
* Weak yuan worries steel mills, traders
* China unveils measures to boost consumption (Updates with Moody’s comment, closing prices, graphic)
By Enrico Dela Cruz
MANILA, Aug 28 (Reuters) - Dalian iron ore futures fell for a second straight day on Wednesday to their lowest in 2-1/2 months as a glut and falling prices of steel in China raised concerns over demand prospects for the steelmaking raw material.
The most-traded iron ore on the Dalian Commodity Exchange , for January 2020 delivery, dropped as much as 3.7% to 571 yuan ($80.50) a tonne, its weakest since June 6.
It ended 0.8% lower at 588 yuan, recouping losses amid renewed optimism about Beijing’s economic stimulus measures.
On the Singapore Exchange, the front-month September 2019 iron ore contract recovered after stretching losses earlier and was up 0.3% at $81.12 a tonne in late trade. October iron ore also bounced back, but remained below $80 level.
Benchmark 62% iron ore for delivery to China SH-CCN-IRNOR62, as assessed by SteelHome consultancy, settled at $86 a tonne on Tuesday, the lowest since March 29.
Iron ore prices had rallied to five-year peaks on July 3 on worries about supply following mine shutdowns in Brazil for safety checks after a deadly tailings dam disaster in January, and a cyclone that disrupted miners’ operations in Australia.
Prices have pulled back since as supplies from Brazil and Australia recovered but remain well above the 2018 levels. Adding pressure is the weak demand outlook due to the excess steel supply in China.
The glut and tepid demand for steel in top producer China have dragged prices of the construction and manufacturing material lower, putting strain on the profitability of mills.
“We heard some of them are already making losses,” said Richard Lu, senior analyst at metals consultancy CRU Group’s Beijing office. “They have decided to cut production. They really want to control their production costs.”
Steel mills and traders were also worried about the weak yuan which could further bloat their operating costs, he said.
* China unveiled measures on Tuesday to help boost consumption, including the possible removal of restrictions on auto purchases, as growth in the world’s second-biggest economy falters amid mounting U.S. trade pressures.
* Despite an uptick in off-take from the infrastructure sector, soft demand from property and manufacturing industries will limit steel demand growth in China, Moody’s Investors Service said.
* The major steel-producing city of Tangshan ranked as China’s most polluted in July, even after ordering its mills to cut output in the last 10 days of the month.
* Tangshan reportedly will loosen its steel output restrictions next month, although such policy could be reversed as authorities move to minimise smog ahead of China’s National Day celebrations in early October.
* Construction steel rebar futures on the Shanghai Futures Exchange edged down 0.3% to 3,317 yuan a tonne.
* Hot-rolled coil, steel used in cars and home appliances, slipped 0.3% to 3,588 yuan a tonne.
* Other steelmaking ingredients also rebounded, with coking coal up 0.2% at 1,305 yuan a tonne, while coke gained 0.5% to 1,887 yuan.
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($1 = 7.0928 yuan)
Reporting by Enrico dela Cruz; Editing by Tom Hogue and Sriraj Kalluvila