* Iron ore contracts fall as much as 3.8 pct in early trade
* Mills may postpone iron ore purchases due to uncertainty in downstream demand - ANZ
* Steel supplies glut may not be easily changed - analysts (Adds details)
BEIJING, May 21 (Reuters) - China’s Dalian iron ore futures fell more than 3 percent on Monday to their weakest level in two weeks due to technical selling and growing concerns that steel mills in the world’s top producer may delay orders amid uncertainty about metal demand.
Declining for a fourth straight session, the most-active iron ore futures on the Dalian Commodity Exchange fell as much as 3.8 percent to 462 yuan ($72.29) a tonne in early deals, their lowest since May 7.
It settled 3.2 percent lower at 465 yuan, having notched up its biggest one-day drop in two months. Prices also pierced their 50-day moving average at 470 yuan per tonne.
“Futures on the Dalian Exchange fell in line with losses in steel markets, as reports emerged that steel mills may postpone purchases of iron ore due to uncertainty in downstream demand,” said analysts from ANZ in a note.
The southern part of the country will soon see the rainy season, which typically curbs steel demand as bad weather would disturb construction works.
However, iron ore inventories at Chinese ports continued to decline last week as of May 18, falling 1.2 million tonnes compared to a week ago to 157.56 million tonnes, but remain at a level not far from the record of 162.8 million tonnes in late March, data from Mysteel consultancy showed.
“It still needs to wait for a few more days to see if iron ore is really on a downward trend,” said a Shanghai-based trader.
The utilisation rate at steel mills has climbed back to the level before the heating season kicked in, when blast furnaces were ordered to partly shut to reduce emissions, in early November, reaching 70.17 percent last week, Mysteel data showed.
Meanwhile, steel products destocking is slowing down. Stockpiles of construction steel rebar fell 6.9 percent last week to 6.07 million tonnes.
“Steel demand is waning while supplies are going up... Uncertainties in the future will largely depend on weather conditions and environmental policies...but the situation of glut may not be easily changed,” said analysts from Orient Futures in a note.
The benchmark Shanghai rebar futures lost 1.8 percent to 3,589 yuan a tonne on Monday. ($1 = 6.3909 Chinese yuan) (Reporting by Muyu Xu and Josephine Mason; Editing by Sunil Nair and Subhranshu Sahu)