* China approves $33.7 bln in railways projects
* China Q4 growth may fall below 6.5 pct - report (Updates with closing prices)
By Enrico Dela Cruz
MANILA, Jan 3 (Reuters) - Chinese iron ore and steel prices recovered on Thursday after easing on the first trading day of the year, but doubts remain over the sustainability of such gains amid concerns over growth in the world’s second-largest economy.
The rebound followed news that China’s state planner has approved inter-city railway projects in the eastern provinces of Jiangsu and Anhui, with a combined total investment value of $33.7 billion.
The most-active rebar contract on the Shanghai Futures Exchange ended the session up nearly 2 percent at 3,455 yuan ($502.48) a tonne. Hot rolled coil climbed 1.3 percent to 3,350 yuan.
China’s expected economic slowdown in 2019, though, means that iron ore demand “would not be very high this year”, said Richard Lu, analyst at CRU consultancy in Beijing, casting doubt on the sustainability of any price recovery.
“The physical market for steel remains very bearish ... and we still think that is really because of the weaker demand,” Lu said.
China’s economic growth could fall below 6.5 percent in the fourth quarter as companies face increased difficulties, a central bank magazine said on Wednesday.
Steel prices had turned lower on Wednesday following disappointing economic data from China.
“The price increase today may just be some kind of a normal upward correction,” Lu said, noting that it also comes ahead of the expected restocking by steel mills, which he said usually occurs three to four weeks before the Chinese New Year holidays.
The most traded iron ore on the Dalian Commodity Exchange rose 1.1 percent to 497 yuan a tonne.
Coking coal jumped 1.4 percent to 1,175.5 yuan. Coke ended 2.8 percent higher at 1,937 yuan, off the day’s high of 1,944 yuan.
Lu said he doubted China’s “very promising” infrastructure spending plan would create significant support for steel and steelmaking raw material prices at this stage.
The National Development and Reform Commission announced in a statement on its website on Wednesday that the eight inter-city railway projects will have a total length of 1,063 km, with 980 km in Jiangsu.
“We may still need to wait for the details of the plan,” Lu said, pointing out also that China’s debt loads may limit its ability to finance such projects.
($1 = 6.8759 yuan)
Reporting by Enrico dela Cruz; Editing by Richard Pullin and Tom Hogue