* BHP says iron ore output target under review after mine disaster
* Samarco suspension may have little impact on China supply-trader
By Manolo Serapio Jr
MANILA, Nov 9 (Reuters) - Iron ore futures in China rose on Monday as a recovery in steel prices helped the raw material rebound from four-month lows, while Citigroup (N:C) said the suspension of shipments from a mine in Brazil after a flooding disaster may also be bullish for prices.
BHP Billiton Ltd BHP.AX BLT.L said it was reviewing its fiscal 2016 iron ore production guidance of 247 million tonnes after a dam ruptured at the Samarco Mineração S.A. mine, killing at least two people and with 28 still missing. urn:newsml:reuters.com:*:nL1N1330E3
While Samarco accounted for only 1.8 percent of global iron ore exports last year, it represents around a fifth of global exports of iron ore pellets, Citigroup said in a report.
"The loss of such volumes at the same time that Hebei and much of northern China received the first snow of the season suggests a bullish outlook for pellet and lump premiums," the bank said in a report. Samarco produced 25.1 million tonnes in 2014, of which 24.1 million tonnes was pellets, Citigroup said.
Iron ore for January delivery on the Dalian Commodity Exchange DCIOcv1 rose 0.6 percent to 347.50 yuan ($55) a tonne by 0343 GMT.
The most-traded May rebar on the Shanghai Futures Exchange SRBcv1 climbed 0.8 percent to 1,802 yuan per tonne after falling to a record low of 1,768 yuan last week.
Key to the recent weakness in iron ore prices was shrinking steel demand in top market China.
China imported 75.52 million tonnes of iron ore in October, down 12.3 percent from the previous month, government data showed, with National Day holiday disruptions compounded by a slowdown in the domestic steel industry. urn:newsml:reuters.com:*:nL3N13303X
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.6 percent to $47.40 a tonne on Friday, according to the Steel Index, the lowest since July 8.
Citigroup said it does not see a "high probability of significant further declines by year-end" adding that the annual loss of 25-30 million tonnes of supply from Samarco "reinforces this."
But the disruption in shipments of iron ore pellets - higher grade material that is ideal for feeding blast furnaces in steel mills - from the Samarco mine may have little impact on Chinese supply, said a Shanghai-based iron ore trader.
"Cost for pellets is relatively higher than (iron ore) fines and mills tend to use these to increase their production rate. But given the poor steel market, they are more focused on costs," he said.
Rebar and iron ore prices at 0343 GMT
Contract
Last
Change Pct Change SHFE REBAR MAY6
1802
+15.00
+0.84 DALIAN IRON ORE DCE DCIO JAN6
347.5
+2.00
+0.58 SGX IRON ORE FUTURES DEC
44.89
+0.22
+0.49 THE STEEL INDEX 62 PCT INDEX
47.4
-0.30
-0.63 METAL BULLETIN INDEX
48.21
-0.50
-1.03
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3578 Chinese yuan)