MANILA, Jan 19 (Reuters) – Iron ore futures in China edged lower on Friday, headed for their first weekly drop in three, as slower demand stalled a rally in steel prices after they surged nearly 50 percent last year. Spot iron ore prices were also on course for their first weekly fall out of three, with the benchmark rate hitting a 2-1/2-week low under $75 a tonne. „Now is really the slowest season for steel production and for steel demand overall,“ said Helen Lau, analyst at Argonaut Securities in Hong Kong. Winter in China usually slows activity in the construction sector, one of the biggest consumers of steel. China has also imposed restrictions on steel production in 28 cities from November through March in its campaign against smog. The most-active iron ore contract for May delivery on the Dalian Commodity Exchange was down 0.3 percent at 533.50 yuan ($83) a tonne by 0307 GMT. The contract has lost almost 3 percent so far this week. Weaker futures have also dragged down spot prices. Iron ore for delivery to China’s Qingdao port hit a 2-1/2-week trough of $74.51 per tonne on Wednesday, recovering only slightly to $74.87 on Thursday, data from Metal Bulletin showed. The spot benchmark has dropped 4 percent this week. Underlining leaner demand, inventories of construction steel product rebar among Chinese traders have risen to 3.62 million tonnes as of Jan. 12, from a record low of 2.84 million tonnes in mid-December, according to data from SteelHome consultancy. The most-traded rebar on the Shanghai Futures Exchange was up 0.5 percent at 3,863 yuan a tonne. But rebar, which climbed 46 percent last year, has fallen nearly 6 percent since touching a three-month high of 4,104 yuan on Dec. 4.
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