Chinese steel and iron ore futures fell on Tuesday to near the lowest levels for most-active contracts on worries over slow demand for steel in the world's top consumer that has prompted big producers to curb output.

    Steel consumption is seasonally weaker in China during the summer months that start from June as construction activity thins, extending a slow period for the steel sector that began last month.

    Output of larger Chinese mills have dropped since mid-May, hitting 1.767 million tonnes of crude steel a day in the last 11 days of the month, down from this year's high of 2.28 million tonnes reached in mid-April, based on estimates from the China Iron and Steel Association.

    Traders in China have been running down their steel inventories over the past 14 weeks, with their stocks of five major steel products slipping to 13.91 million tonnes last week from 14.12 million tonnes in the previous week, data from industry consultancy Mysteel showed.

    "Steel prices may continue to be near historical lows for an extended period," said Zhou Ting, analyst at Jinrui Futures in Shenzhen, noting that construction activity in southern China was slowing down due to the hot weather.

    The most-active rebar for delivery in October on the Shanghai Futures Exchange touched a session low of 3,043 yuan ($490) a tonne, near the weakest level of 3,034 yuan for a most-traded contract reached last week. It was down 0.6 percent at 3,049 yuan by 0259 GMT.

    At the Dalian Commodity Exchange, iron ore for September delivery slipped 0.7 percent to 683 yuan a tonne. It  fell to 680 yuan earlier, also not far off last week's 675 yuan which was its lowest since the bourse launched the product in October.

    Slower steel output would curb demand for raw material iron ore from Chinese mills. The country's iron ore imports fell to 77.4 million tonnes in May from 83.4 million tonnes in April which was the second highest monthly volume.

    But reducing steel output may trim excess market supply and help support prices going forward, said a trader in Shanghai.

   "That could eventually boost iron ore buying interest from mills," he added.

    Iron ore futures in Singapore were largely steady with the July contract on the Singapore Exchange little changed at $94.26 a tonne in early deals.

    Benchmark ore with 62 percent iron content for immediate delivery to China .IO62-CNI=SI slipped 0.2 percent to $94.30 a tonne on Monday, according to Steel Index which compiles the data.

    The benchmark price has stayed below $100 for three weeks now, but has found some support since hitting a low of $91.80 on May 30, its cheapest since September 2012.

    "We believe that most Chinese traders consider prices below $100/tonne to represent good value and are likely to increase purchases now that the fall in prices has been arrested," Citigroup analyst Ivan Szpakowski said in a report on Tuesday.

    "Moreover, while iron ore inventories at mills are not particularly low, steel mills are likely to at least slow the pace of destocking, with even such a modest step representing an improvement in spot market demand."

    Szpakowski said while prices should be more stable in the second half of the year, he remains bearish in the medium term with average price forecasts of $90 for 2015 and $80 for 2016.

• [Editor:Sophie]