Shanghai rebar falls, pressure on iron ore as restocking stalls

* Iron ore may fall below $100 again amid uncertainty-SSY
* Trading activity thins ahead of China holiday

By Manolo Serapio Jr
SINGAPORE, Sept 26 (Reuters) - China steel futures fell on
Wednesday for the first time in three sessions, putting more
pressure on spot iron ore prices that may fall below $100 per
tonne again this week as a slowdown dents steel demand in the
world's top consumer.
Iron ore has struggled to sustain price gains since
rebounding from a three-year low of $86.70 this month, with the
outlook for Chinese steel demand staying blurry despite a recent
increase in spot steel and futures prices.
The most-traded rebar contract for January delivery on the
Shanghai Futures Exchange fell nearly 1 percent to
3,514 yuan ($560) per tonne on Wednesday.
Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI was unchanged at $103.70 a tonne on Tuesday,
according to data provider Steel Index.
Most Chinese steel mills have stocked up on iron ore ahead
of a week-long National Day holiday next week, limiting activity
in the physical market. Many traders were also heading to a
major industry conference in China's port city of Dalian.
"Most of the mills have taken action in advance so I expect
prices to stabilise or even soften a bit for the rest of the
week," said a Shanghai-based trader.
Uncertainty about the outlook for steel demand in China is
also likely to pressure prices, with the sentiment boost from
Beijing's approval of more than $150 billion in infrastructure
projects this month fading.
"It's going to be very volatile ultimately, my personal
feeling is that it will probably go below $100 this week," said
Jamie Pearce, head of iron ore brokering at SSY Futures, part of
the shipbrokering group Simpson Spence and Young.
Iron ore fell to one-week lows this week despite firmer
steel prices as Chinese mills managed inventories of the raw
material without a clear outlook for steel demand and end-user
consumption remained sluggish overall.
But some traders say iron ore prices are unlikely to go
below $90 per tonne again.
"If the price goes below $100, domestic supply in China
would fall dramatically and this would increase imports which
would then support prices back up again," said a second iron ore
trader in Shanghai.

Shanghai rebar futures and iron ore indexes at 0458 GMT

Contract Last Change Pct Change
SHFE REBAR JAN3 3514 -33.00 -0.93
PLATTS 62 PCT INDEX 105.5 +1.25 +1.20
THE STEEL INDEX 62 PCT INDEX 103.7 +0.00 +0.00
METAL BULLETIN INDEX 106.32 +0.12 +0.11

Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day

($1 = 6.3066 Chinese yuan)

(Reporting by Manolo Serapio Jr.)
(manolo.serapio@thomsonreuters.com; +65 6870 3884; Reuters
Messaging: manolo.serapio.reuters.com@reuters.net)