* Mill have to cut output due to heavy losses -analyst
* Rebar still at lowest levels since contract launch
SHANGHAI, July 20 (Reuters) - Chinese rebar futures rebounded on Monday to a one-week high on expectations that steel mills in the world's top producer would slash output further due to low prices.
The most traded January rebar contract on the Shanghai Futures Exchange SRBcv1 surged more than 3 percent to a session high of 2,120 yuan ($341.47) a tonne, its loftiest since July 10. It traded 2.1 percent higher at 2,087 yuan by 0300 GMT.
But the contract is trading at some of the lowest levels since its launch on the Shanghai exchange in March 2009.
"The high production rates can not last due to heavy losses, and more mills have started to curtail output," said Zhao Chaoyue, an analyst with Merchant Futures in Shenzhen.
Chinese spot steel prices are at their lowest in more than 20 years as the slowing economy cuts into demand for a range of commodities including iron ore and steel, threatening the survival of small steel mills in the country. ID:nL3N0ZN2MU
Total steel output for the first half of this year declined 1.3 percent to 409.97 million tonnes compared with the same period a year ago. ID:nL3N0ZP3QU
The gains in rebar have driven up iron ore futures to their highest in nearly a week. The most active January contract on the Dalian Commodity Exchange DCIOcv1 rose to a session high of 359.5 yuan a tonne, its highest since July 14.
The contract gained 1.7 percent to 356.5 yuan by 0300 GMT.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI were at $50 a tonne on Thursday, down 0.2 percent from the previous day. Asia's spot iron ore benchmark was not assessed by The Steel Index on Friday due to a holiday.
Rebar and iron ore prices at 0300 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
2087
+43.00
+2.10 DALIAN IRON ORE DCE DCIO JAN6
356.5
+6.00
+1.71 METAL BULLETIN INDEX
50.66
+0.11
+0.22
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.2085 Chinese yuan)