* Dalian iron ore, Shanghai rebar dip
* Demand not picking up despite seasonal expectations
* Iron ore inventories inch up but steel stocks fall
BEIJING, Sept 22 (Reuters) - Chinese steel rebar and iron ore futures both lost ground in the early session on Tuesday as traders worried about market prospects in coming months, with domestic demand still showing few signs of any seasonal improvement.
Steel mills and iron ore miners are gathering in the coastal city of Qingdao this week for their annual China conference. The event is usually an opportunity for traders to make deals, but pessimism is expected to dominate this year's proceedings.
"There has just been no pick-up in demand at all recently and the market is still very cold," said a sales manager with a steel mill based in the city of Tangshan in Hebei province.
"Our sales volume so far this season is pretty much the same as it was in the summer off-season - there hasn't been any increase," he said.
Iron ore for January delivery on the Dalian Commodity Exchange DCIOcv1 sank 2.18 percent to end the morning session at 382 yuan ($59.95) a tonne. The contract has fallen or finished flat in seven straight sessions.
January rebar on the Shanghai Futures Exchange SRBcv1 dropped 1.1 percent to 1,887 yuan a tonne by the midday break, its third session in negative territory.
Losses are mounting at many cash-strapped Chinese steel mills due to the low prices for their wares and they are desperate to cut costs, which is hurting demand for high-quality iron ore.
"Most steelmakers are not interested in increasing production rates and are instead seeking to cut costs by stretching their raw material inventories," said ANZ Bank.
Iron ore inventories at 44 Chinese ports tracked by consultancy SteelHome SH-TOT-IRONINV inched up 0.6 percent last week to 80.55 million tonnes.
But few mills are willing to build up steel product stocks. According to a survey by the China Iron and Steel Association (CISA), product inventories in 22 major Chinese cities have fallen 2.44 percent this month to 8.947 million tonnes.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI was unchanged on Monday at $57.10 a tonne after falling 2.4 percent last week.
The CISA index price for 62-percent grade iron ore inched up 0.55 percent on Monday to $56.31 per tonne.
Rebar and iron ore prices at 0331 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
1887
-21.00
-1.10 DALIAN IRON ORE DCE DCIO JAN6
382
-8.50
-2.18 THE STEEL INDEX 62 PCT INDEX
57.1
+0.00
+0.00 METAL BULLETIN INDEX
57.3
-0.39
-0.68
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3720 Chinese yuan)