* BHP shipment suspension seen supporting prices
* China daily steel output hits record above 2 mln T
* China hikes rates for third time this year (Adds comment, Shanghai rebar)
By Manolo Serapio Jr
SINGAPORE, July 7 (Reuters) - Offers to sell iron ore in the spot market were steady on Thursday, with prices likely to get short-term support from news that miner BHP Billiton has suspended shipments from a major port after a fatal incident.
BHP , the world's No. 3 iron ore producer, said it had suspended port and rail operations at the Port Hedland iron ore terminal in Western Australia following the incident. It said operations would be halted until further notice.
BHP ships more than 150 million tonnes of iron ore annually from Port Hedland and is the biggest customer of the public facility.
"I expect it to be supportive of prices at least for the short term. They're not going to shut down their operations because of this," said a Singapore-based trader.
"I think it will be a temporary thing, probably 48 hours," said Troy Flannery, senior resource analyst at DJ Carmichael in Perth.
Offers for Australia's Newman 62-percent grade iron ore fines, which BHP sells to the spot market, were steady at $174-$176 a tonne, including freight, on Thursday, said Chinese consultancy Umetal.
Indian 63.5/63-grade ore was also unchanged at $177-$179 a tonne.
Iron ore indexes, which track spot transactions and which global miners use in setting supply contract prices, rose on Wednesday.
The Steel Index's 62 percent benchmark .IO62-CNI=SI gained 20 cents to $168.70 a tonne and a similar index by Metal Bulletin .IO62-CNO=MB rose 29 cents to $169.72. Both indexes rose for a fourth straight day.
Platts 62 percent index IODBZ00-PLT edged up a dollar to $174, for a second consecutive day of gains.
CHINA STEEL OUTPUT AT RECORD
Higher Chinese steel prices are aiding gains in iron ore prices.
"But steel prices are not rising as fast as iron ore so we could see iron ore lose steam soon," said the Singapore trader. "We'll probably be rangebound for the next two weeks."
The most active October rebar contract on the Shanghai Futures Exchange ended down 4 yuan at 4,808 yuan per tonne, after hitting a three-week high of 4,823 yuan.
China's daily crude steel output hit a record 2.018 million tonnes in the last 10 days of June, data from the China Iron and Steel Association showed.
China has been producing at a record pace this year on strong demand from the construction sector as the country races to meet its social housing targets. Some analysts expect output to slow during the usual summer lull in July and August.
The data comes a day after China raised interest rates for a third time this year, which most analysts read as suggesting that Beijing may be nearing the end of its monetary policy tightening campaign.
"Probably the next move after a few months time is going to be loosening so that should support iron ore prices," said Flannery.
"And there's a lot of talk out there that China is running behind schedule on its public housing targets which they need to meet by the end of the year."
But tighter credit continues to make it difficult for Chinese traders and steel mills to buy iron ore, with some of them using their stocks to secure loans, traders said.
"I estimate that around 10 million tonnes of iron ore inventories at major ports could not be traded right now as traders use them for bank financing," said an iron ore trader in Beijing.
BHP , the world's No. 3 iron ore producer, said it had suspended port and rail operations at the Port Hedland iron ore terminal in Western Australia following the incident. It said operations would be halted until further notice.
BHP ships more than 150 million tonnes of iron ore annually from Port Hedland and is the biggest customer of the public facility.
"I expect it to be supportive of prices at least for the short term. They're not going to shut down their operations because of this," said a Singapore-based trader.
"I think it will be a temporary thing, probably 48 hours," said Troy Flannery, senior resource analyst at DJ Carmichael in Perth.
Offers for Australia's Newman 62-percent grade iron ore fines, which BHP sells to the spot market, were steady at $174-$176 a tonne, including freight, on Thursday, said Chinese consultancy Umetal.
Indian 63.5/63-grade ore was also unchanged at $177-$179 a tonne.
Iron ore indexes, which track spot transactions and which global miners use in setting supply contract prices, rose on Wednesday.
The Steel Index's 62 percent benchmark .IO62-CNI=SI gained 20 cents to $168.70 a tonne and a similar index by Metal Bulletin .IO62-CNO=MB rose 29 cents to $169.72. Both indexes rose for a fourth straight day.
Platts 62 percent index IODBZ00-PLT edged up a dollar to $174, for a second consecutive day of gains.
CHINA STEEL OUTPUT AT RECORD
Higher Chinese steel prices are aiding gains in iron ore prices.
"But steel prices are not rising as fast as iron ore so we could see iron ore lose steam soon," said the Singapore trader. "We'll probably be rangebound for the next two weeks."
The most active October rebar contract on the Shanghai Futures Exchange ended down 4 yuan at 4,808 yuan per tonne, after hitting a three-week high of 4,823 yuan.
China's daily crude steel output hit a record 2.018 million tonnes in the last 10 days of June, data from the China Iron and Steel Association showed.
China has been producing at a record pace this year on strong demand from the construction sector as the country races to meet its social housing targets. Some analysts expect output to slow during the usual summer lull in July and August.
The data comes a day after China raised interest rates for a third time this year, which most analysts read as suggesting that Beijing may be nearing the end of its monetary policy tightening campaign.
"Probably the next move after a few months time is going to be loosening so that should support iron ore prices," said Flannery.
"And there's a lot of talk out there that China is running behind schedule on its public housing targets which they need to meet by the end of the year."
But tighter credit continues to make it difficult for Chinese traders and steel mills to buy iron ore, with some of them using their stocks to secure loans, traders said.
"I estimate that around 10 million tonnes of iron ore inventories at major ports could not be traded right now as traders use them for bank financing," said an iron ore trader in Beijing.
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