* Dalian iron ore up 1 pct, expectations of short-term boost
* Mills may undergo maintenance during weak summer -Argonaut
By Manolo Serapio Jr
MANILA, June 2 (Reuters) - Shanghai steel futures ticked higher on Thursday, but did not stray far from three-month lows amid expectations of slower seasonal demand in top market China.
Amid an existing glut, steel supply in China has risen since a price surge over March and April spurred once-shut mills to reopen. Traders say these producers can continue operating over the next few months, building the surplus further.
That should support short-term demand for steel raw material iron ore, for which Dalian futures rose 1 percent on Thursday.
The most-traded rebar on the Shanghai Futures Exchange SRBcv1 was up 0.2 percent at 1,964 yuan ($299) a tonne by 0257 GMT. The construction steel product touched 1,894 yuan on Monday, its weakest since March 4.
Construction activity typically slows down in China from June and through summer due to hot weather. Traders say rains in the southern part of the country this month will similarly curb construction and consequently steel demand.
"Looking ahead, steel mills may undergo overhaul and maintenance during the summer time. Thus steel production may plateau and utilization rates of blast furnaces ... will decrease," Argonaut Securities said in a note.
Utilisation rates at Chinese steel plants hit 91 percent as of May 27, the highest since September 2015, the brokerage said.
The most-active iron ore on the Dalian Commodity Exchange DCIOcv1 rose 1 percent to 348 yuan a tonne, having touched a three-month low of 333 yuan on Monday.
"I'd say steel demand this month would be flat. But towards the end of the month when the temperature picks up, demand will weaken," said an iron ore trader in Shanghai.
Despite a decline in steel prices from multi-month highs hit in April, some mills in China's northern region are still keeping production levels high since they're still making some profit, albeit smaller, the trader said.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.6 percent to $49.30 a tonne on Wednesday, the lowest since Feb. 29, according to data compiled by The Steel Index.
($1 = 6.5780 Chinese yuan)