(Corrects direction in paragraph 15 to rose, not slipped)
* Dalian iron ore down 0.9%
* Singapore iron ore slips 1.4%
* Spot iron ore hits three-month high
By Enrico Dela Cruz
MANILA, Dec 12 (Reuters) - Benchmark iron ore futures edged lower in early trade on Thursday as concerns resurfaced over demand prospects for the steelmaking raw material in top steel producer China.
China's crude steel output next year is expected to reach 981 million tonnes, down from the projected 988 million tonnes this year, according to the China Metallurgical Industry Planning and Research Institute. demand in China is expected to fall 0.6% year-on-year to 881 million tonnes in 2020, the government consultancy said on Thursday.
Dalian Commodity Exchange's DCIOcv1 most-traded iron ore contract, with May 2020 expiry, fell as much as 0.9% to 646 yuan ($91.78) a tonne, and was down 0.5% by 0245 GMT.
On the Singapore Exchange, the front-month January 2020 contract slumped 1.4% to $91.53 a tonne.
Adding to worries about demand for iron ore, China's northern Hebei province, which is home to the country's top steelmaking cities, has issued an "orange smog alert" effective from Friday, according to state-backed Hebei News. smog alerts, the second highest after red in Hebei's three-tier pollution warning system, require companies, including steel mills, to take action to cut emissions and in some cases restrict output amid adverse weather conditions that could worsen pollution.
"With steel demand remaining lacklustre amid rising exports from Brazil and Australia, iron ore was expected to remain under pressure," said Daniel Hynes, senior commodity strategist at ANZ.
The rebound in spot iron ore prices over the past month all the way above $90 a tonne this week was thus unexpected, he said.
"China's proactive fiscal policy is having little impact on infrastructure spending, while the manufacturing sector remains weak," Hynes said.
FUNDAMENTALS
* Benchmark spot 62% iron ore for delivery to China SH-CCN-IRNOR62 climbed for a third straight day to $94.80 a tonne on Wednesday, its highest since Sept. 18 this year, data from SteelHome consultancy showed.
* Steel mills enjoying improved margins chased iron ore higher in recent days, optimistic that demand would be stronger in 2020, according to ANZ's Hynes.
* Other steelmaking raw materials also fell, with Dalian coking coal DJMcv1 down 0.9% at 1,229.50 yuan a tonne, while Dalian coke DCJcv1 dropped 1.1% to 1,839 yuan.
* The most-traded construction steel rebar contract on the Shanghai Futures Exchange SRBcv1 edged down 0.3% to 3,516 yuan a tonne.
* Hot-rolled steel coil SHHCcv1 , used in cars and home appliances, rose 0.7% to 3,746 yuan a tonne.
* Shanghai stainless steel futures SHSSc1 rose 1.5% to 14,355 yuan a tonne. ($1 = 7.0389 yuan)