* Some mills have purchased iron ore ahead of Sept, Oct holidays
* Iron ore buyers in physical market "running for the hills" -TSI
* China steel exports, iron ore imports drop in Aug
By Manolo Serapio Jr
MANILA, Sept 8 (Reuters) - Chinese steel futures extended losses to touch a six-week trough on Thursday, pressured by increased supply as mills around the eastern city of Hangzhou resume production after the G20 summit.
Those mills were ordered by government authorities to suspend output ahead of the event earlier this week to clear the skies.
"Steel is pressured by a short-term rise in additional supply post-G20," said a Shanghai-based iron ore trader.
The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 was down 1.3 percent at 2,341 yuan ($351.13) a tonne by 0324 GMT, adding to Wednesday's 4-percent slide.
Rebar touched a low of 2,321 yuan, its weakest since July 26.
The weakness in steel prices helped drag down raw material iron ore, with the most-active January iron ore on the Dalian Commodity Exchange DCIOcv1 down 2.1 percent at 407 yuan a tonne. It fell as far as 402.50 yuan, the lowest since Aug. 1.
Talk of possibly more mills being shuttered in China's major steelmaking city of Tangshan as the government steps up an environmental crackdown to address overcapacity also curbed demand for forward iron ore cargoes, said the Shanghai trader.
"Several of our customers already have enough stocks until mid-October after recent purchases," he added.
Chinese markets are shut for the Mid-Autumn festival on Sept. 15-16 and on Oct. 3-7 for the National Day holiday.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI eased 0.5 percent to $58.30 a tonne on Wednesday, the lowest since July 27, according to The Steel Index (TSI).
The declines in ferrous futures sent buyers of physical iron ore cargoes "running for the hills," said TSI, which compiles information on deals done in China.
Data on Thursday showed China's iron ore imports slipped 0.8 percent in August from a near record level in the previous month, while steel exports also dropped. = 6.6670 Chinese yuan)