* Dalian iron ore headed for biggest monthly loss in a year
* Coking coal drops more than 4 pct
* China steel PMI hits 1-year high in May, but risks rising
By Manolo Serapio Jr
MANILA, May 31 (Reuters) - Iron ore futures in China fell as much as 4 percent on Wednesday to the lowest since November, and were set for their biggest monthly decline in a year, amid lower steel prices and a glut of the raw material.
Industry data showing activity in China's steel industry expanded at the fastest pace in a year in May spurred gains in Shanghai steel futures earlier in the session. But steel later gave up those gains and traded lower as analysts warned demand may ease in the coming summer months when construction activity slows. most-traded iron ore contract on the Dalian Commodity Exchange DCIOcv1 fell as low as 433.50 yuan ($63) a tonne, its lowest since November 2016. It was down 3.2 percent at 437 yuan by midday.
The contract has fallen 14 percent so far in May, its biggest monthly decline since May 2016.
Chinese markets reopened on Wednesday after being shut for public holidays on Monday and Tuesday.
The decline in Chinese futures, along with a stubborn glut, have fuelled a nearly 40 percent drop in spot iron ore prices from this year's peak. the medium to longer term, iron ore should move towards $50 per tonne, said Julius Baer analyst Carsten Menke.
"This is based on the assumption that Chinese steel production has moved beyond its structural peak and would decline steadily over the coming years," Menke said.
"At the same time, we see iron ore supplies from Australia and Brazil expanding and displacing higher-cost Chinese volumes."
Last week, iron ore stocks at China's ports reached 136.6 million tonnes SH-TOT-IRONINV , the highest since consultants SteelHome began tracking the data in 2004. That is enough to build the Eiffel Tower in Paris more than 13,000 times over. ore for delivery to China's Qingdao port .IO62-CNO=MB was unchanged at $58.50 a tonne on Tuesday, according to Metal Bulletin. The spot benchmark has lost 15 percent in May, heading for its steepest monthly drop in a year.
The most-active rebar on the Shanghai Futures Exchange SRBcv1 was down 0.9 percent at 3,182 yuan a tonne.
Steelmaking coal also tumbled. Coking coal traded on the Dalian exchange DJMcv1 fell 4.2 percent to 998.50 yuan per tonne and coke DCJcv1 dropped 3.7 percent to 1,487.50 yuan. ($1 = 6.8329 Chinese yuan)