* Chinese spot steel prices firm even as futures drop
* Dalian iron ore rebounds from three-week low (Updates prices)
By Manolo Serapio Jr
MANILA, March 30 (Reuters) - Iron ore futures in Asia steadied on Wednesday as firm Chinese steel prices supported buying interest among mills looking to restart production.
Chinese steel producers have been either boosting output or resuming operations amid recent gains in prices as they look to brisk seasonal demand in the second quarter when construction activity typically increases.
A small steel producer in China's northern Shanxi province is planning to resume production after a three-month stoppage, said a Shanghai-based trader. "They are in the market to procure raw material," he said.
"Buying interest for iron ore is still healthy because of the strong steel market," he added.
The most-traded September iron ore on the Dalian Commodity Exchange DCIOcv1 closed up 0.3 percent at 379 yuan ($58.48) a tonne, recovering from Tuesday's three-week low of 371.50 yuan.
On the Singapore Exchange, May iron ore SZZFK6 was off 0.2 percent at $50.15 a tonne.
Spot steel prices in Shanghai continued to gain even as futures retreated from recent highs, suggesting good prospects for near-term demand, traders said.
Rebar, a construction steel product, is currently sold at around 2,300 yuan a tonne in Shanghai, although the October rebar contract on the Shanghai Futures Exchange SRBcv1 stood at 2,113 yuan, down 1.6 percent from the previous day's settlement.
The exchange-traded rebar touched a nine-month high of 2,240 yuan on March 23.
While some steel mills are looking to restart production, others have suffered from tough conditions in the past year as domestic demand shrank in step with a slower economy.
Dongbei Special Steel Group Co Ltd, an unlisted steel manufacturer based in northeast China, has missed a payment on an 800 million yuan ($123 million) short-term note several days after the group's chairman was found dead in an apparent suicide. financial magazine Caixin reported that Tianjin-based Bohai Steel Group Co Ltd may be unable to make full repayment on 192 billion yuan of debt. ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.9 percent to $54.70 a tonne on Tuesday, according to The Steel Index. But the spot benchmark was still up nearly 28 percent for the year.
($1 = 6.4809 Chinese yuan)