* Dalian iron ore surges to record 844 yuan/T on Friday
* Rebar set to make biggest weekly gain in nearly 7 mths
By Enrico Dela Cruz
MANILA, June 28 (Reuters) - Iron ore prices in China hit record highs on Friday and were on track to post their seventh consecutive monthly gain, buoyed by expectations that supply of the raw material in the world's top steel producer will remain tight in the second-half of the year.
Steel rebar futures were little changed after a seven-session rally, but were heading for their best week since December 2018 amid falling stockpiles and mandatory output cuts in some steel hubs.
The most-active September iron ore contract on the Dalian Commodity Exchange DCIOcv1 rose as much as 2.7% to 844 yuan ($122.74) a tonne, the highest level since 2014 when trading in China's iron ore futures started. The benchmark has risen about 14% on a monthly basis.
"The recent restart of the Brucutu iron ore mine in Brazil has brought no relief to the market, with tightness expected to persist for the foreseeable future," said Daniel Hynes, senior commodity strategist at ANZ.
"Falling steel inventories (in China) also supported sentiment."
Spot iron ore prices have jumped to the highest levels in more than five years, with benchmark 62% fines for delivery to China SH-CCN-IRNOR62 at $116.70 a tonne as of Thursday, according to SteelHome consultancy.
Iron ore inventory at China's ports had fallen to 116.75 million tonnes as of last week SH-TOT-IRONINV , the lowest since the start of 2017, SteelHome data showed, largely reflecting the impact of reduced supply from Brazil.
Brazil's Vale SA VALE3.SA , which suspended some mining operations for safety checks following a deadly tailings dam burst in January, has resumed full Brucutu operations. mine should be back to 100% capacity (of 30 million tonnes) soon," ANZ said in a note. "However, this didn't completely ease concerns about shortages in the market, with Rio Tinto's cut to guidance for 2019 output still fresh in its mind."
Mining giant Rio Tinto Ltd RIO.AX RIO.L last week lowered its guidance on iron ore volumes it expects to ship this year from the key Pilbara region in Australia for the third time since April, citing operational problems. most-active construction steel rebar contract, for October delivery, on the Shanghai Futures Exchange SRBcv1 was up 0.1% at 4,040 yuan a tonne at 0235 GMT, near a more than 8-year peak of 4,095 yuan hit on Thursday.
Hot rolled coil futures SHHCcv1 , steel used in cars and home appliances, were down 0.1% at 3,938 yuan a tonne.
Other steelmaking raw materials traded mixed with Dalian coking coal DJMcv1 up 0.4% at 1,388 yuan, while coke futures DCJcv1 slipped 1.4% to 2,066 yuan.