* Steel prices hover around near 3-month high
* Iron ore drop as mills’ appetite seen to weaken (Updates closing prices)
SHANGHAI, Feb 27 (Reuters) - Chinese steel futures rose for the third straight session to around their highest in almost three months on Tuesday, after China’s top steelmaking city proposed extending output curbs by an additional eight months.
In a draft document reviewed by Reuters, the city of Tangshan proposed new restrictions on production once current curbs expire in March in order to improve air quality. Under the plan, mills would cut output by 10 percent to 15 percent between March 16 and Nov. 14.
“The proposal has sent market signals that China will continue pushing hard to improve air quality and we may see more output curbs this year and prices will be supported in the long term,” said a senior manager at a trading house in Shanghai.
The most active rebar on the Shanghai Futures Exchange closed 0.9 percent higher at 4,035 yuan ($639.50) a tonne and was not far from Monday’s intra-day high of 4,047 yuan.
Iron ore on the Dalian Commodity Exchange dropped 0.6 percent to 546.50 yuan a tonne, amid expectations that demand for the main raw material will weaken as mills cut output.
Coke edged up 0.8 percent to 2,273.50 yuan a tonne and coking coal rose 1 percent to 1,428.50 yuan a tonne.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB edged up on Monday by 54 cents to $79.36 a tonne, according to Metal Bulletin.
$1 = 6.3096 Chinese yuan renminbi Reporting by Ruby Lian and Josephine Mason; editing by Richard Pullin and Christian Schmollinger