* Iron ore had worst October since 2011 after 9-pct fall
* Goldman repeats that sees iron ore at $44 in 2016, $40 in 2017
By Manolo Serapio Jr
MANILA, Nov 2 (Reuters) - Dalian iron ore futures slipped on Monday, moving towards last week's three-month low, with rising inventory of the raw material at China's ports underlining weak demand amid soft steel prices.
Stockpiles of iron ore at 44 Chinese ports reached 84.75 million tonnes on Oct. 30, up 800,000 tonnes from the previous week and the highest since the end of May, based on data tracked by consultancy SteelHome. SH-TOT-IRONINV
"We believe, based on seasonality trends, that there is still upside in port stocks, which should continue to put some downside pressure on iron ore prices," ANZ Bank said in a note.
China's steel demand dropped 5.8 percent in January-September, according to the China Iron and Steel Association, amid a slowing economy that fresh data showed continued to lose momentum last month.
Activity in China's manufacturing sector unexpectedly contracted in October for a third straight month, an official survey showed on Sunday. urn:newsml:reuters.com:*:nL3N12T3T3
The most-traded January iron ore on the Dalian Commodity Exchange DCIOcv1 was off 0.1 percent at 360.50 yuan ($57) a tonne by 0313 GMT, not far above last week's trough of 355 yuan. That was the lowest for the contract since July 28.
The latest weak data from China came despite sustained efforts by Beijing to stimulate the world's No. 2 economy including cutting interest rates last month for the sixth time in less than a year.
While the Chinese government said big companies are stabilising, smaller ones continue to underperform, said Helen Lau, analyst at Argonaut Securities.
To keep growth on track, China is very likely to cut interest rates further "or announce more targeted easing policies to alleviate the financial strain facing small companies," said Lau.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI gained 1 percent to $49.50 a tonne on Friday, according to The Steel Index, after touching $49 the previous day, its lowest since July 9.
"As supply and demand continue to diverge, prices should fall below marginal production costs in order to trigger mine closures on a sufficient scale and we forecast prices to decline to $44 next year and $40 in 2017," Goldman Sachs (N:GS) analyst Christian Lelong said in a note. Those figures were unchanged from an earlier forecast. urn:newsml:reuters.com:*:nL3N12X1PE
The spot benchmark lost 9 percent last month, logging its deepest October fall since 2011 amid weak steel prices and shrinking demand that may prod Chinese steel mills to make deeper production cuts over the next few months. urn:newsml:reuters.com:*:nL3N12S15O
January rebar on the Shanghai Futures Exchange SRBcv1 was up 0.2 percent at 1,790 yuan a tonne after matching last week's record low of 1,779 yuan.
Rebar and iron ore prices at 0313 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
1790
+3.00
+0.17 DALIAN IRON ORE DCE DCIO JAN6
360.5
-0.50
-0.14 SGX IRON ORE FUTURES DEC
45.95
-0.30
-0.65 THE STEEL INDEX 62 PCT INDEX
49.5
+0.50
+1.02 METAL BULLETIN INDEX
49.83
+0.18
+0.36
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3333 Chinese yuan)