* Dalian futures up sharply for 2nd day after China holiday
* Shanghai rebar not far above record low
By Manolo Serapio Jr
MANILA, Oct 9 (Reuters) - Dalian iron ore futures gained for a second straight session on Friday after China's week-long National Day holiday as steel producers restocked, with some suppliers seen holding back offers to wait for better prices.
The most-traded January iron ore contract on the Dalian Commodity Exchange DCIOcv1 was up 3.2 percent at 385.50 yuan ($61) a tonne by 0327 GMT, adding to Thursday's 2-percent gain.
"Some mills will need to restock on raw material after the holiday but I'm not sure how strong that would be," said a Shanghai-based iron ore trader. "There is not much offer in the market and with prices increasing, some suppliers want to hold back cargo and try to offer later."
Iron ore futures on the Singapore Exchange also climbed, with the December contract SZZFZ5 rising nearly 2 percent to $49.75 a tonne. Rising futures bode well for physical prices which have barely moved during China's Oct. 1-7 break.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose 0.7 percent to $54.80 per tonne on Thursday, according to the Steel Index.
A slow steel market in China, which may push mills to reduce production and curb demand for iron ore, could cap any rally in prices of the raw material.
"We believe with mills continuing to operate at negative margins there is little upside in raw material prices," investment bank ANZ said in a note.
Steel demand in China, the world's biggest consumer, has continued to shrink this year amid a slowdown in the overall economy. China's steel consumption fell last year for the first time since 1981.
The temperature in northern China is likely to drop very soon, which could halt construction projects, said another Chinese trader. "Steel prices would be under more pressure," he said.
Rebar, a steel product used in construction, was up 0.6 percent at 1,843 yuan a tonne on the Shanghai Futures Exchange SRBcv1 . The most-active January contract touched a record low of 1,815 yuan on Sept. 30.
Rebar and iron ore prices at 0327 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
1843
+10.00
+0.55 DALIAN IRON ORE DCE DCIO JAN6
385.5
+12.00
+3.21 SGX IRON ORE FUTURES DEC
49.75
+0.83
+1.70 THE STEEL INDEX 62 PCT INDEX
54.8
+0.40
+0.74 METAL BULLETIN INDEX
55.97
+2.83
+5.33
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3491 Chinese yuan)