* Dalian iron ore drops to near Monday’s 7-week low
* But Argonaut sees steel prices rising through Q4 (Updates prices)
By Manolo Serapio Jr
MANILA, Sept 19 (Reuters) - Chinese steel futures dropped to their weakest in almost a month on Tuesday amid worries that planned winter curbs may dent demand in the world’s top consumer, dragging down prices of raw material iron ore.
Beijing’s will suspend construction of major public projects during winter to improve the Chinese capital’s air quality, the official Xinhua News agency reported on Sunday.
Construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15 within the city’s six major districts and surrounding suburbs.
The most-active rebar contract on the Shanghai Futures Exchange closed down 1.2 percent at 3,740 yuan ($568) a tonne. Earlier in the session, it touched 3,735 yuan, its weakest since Aug. 23.
The most-traded iron ore on the Dalian Commodity Exchange slid 1.4 percent to end at 498 yuan per tonne. The contract hit 493.50 yuan on Monday, the lowest since July 27.
But Argonaut Securities analyst Helen Lau said the sustained property price increases in smaller Chinese cities along with planned cuts in steel production during winter should support steel prices.
Major industrial zones in China, including top steel producer Hebei province, have been ordered to curb output by up to half from November through March.
Data released on Monday showed new home prices in Tier-3 Chinese cities rose a faster-than-average 0.4 percent in August.
Guilin, a smaller Tier-3 city in southern China’s Guangxi Zhuang Autonomous Region, was the top price performer in August, rising 1.1 percent.
“Together with production cuts during the winter season, we expect steel prices to rise further through the fourth quarter,” Lau said in a note.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB eased 0.5 percent to $71.76 a tonne on Monday, the lowest since July 28, according to Metal Bulletin, tracking losses in Chinese futures in the previous session.
$1 = 6.5814 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Joseph Radford and Sherry Jacob-Phillips