* Market sentiment remains bearish - analyst
* Billet prices up marginally, recovery vulnerable
* FMG shipments up 33 pct at 165.4 mln tonnes in fiscal 2015 (Updates close prices)
SHANGHAI, July 23 (Reuters) - Shanghai rebar futures dropped for the second straight day on Thursday amid worries over the weak outlook for demand in the world's top producer, China.
The most traded rebar futures on the Shanghai Futures Exchange SRBcv1 closed lower 0.15 percent at 2,050 yuan ($330.14) a tonne after hitting an intraday high of 2,062 yuan. It had tumbled more than 3 percent on Wednesday.
"The market is too weak, and the little recovery was easily wiped out as sentiment remains bearish," said Xia Junyan, an analyst with Everbright Futures in Shanghai.
Billet prices in the top steel-producing city of Tangshan rose 10 yuan to 1,760 yuan a tonne, traders said.
Iron ore futures on the Dalian Commodity Exchange DCIOcv1 also stretched losses, down 0.7 percent to close at 352 yuan a tonne. The price hit its downside limit on Wednesday.
"Many steel mills lack sufficient orders and cash. Everyone is having a difficult life now," said an iron ore trader in Beijing.
However, big global miners are sticking to their expansion plans despite soft demand in the world's top consumer, China, which will weigh on prices of the raw material.
Fortescue Metals Group FMG.AX hit the high end of its forecast for iron ore shipments in fiscal 2015, and said it planned to maintain a similar rate in the current year. ID:nL3N10304J
Combined output from Australia's mines should come close to 800 million tonnes this year, based on forecasts from companies, accounting for roughly two-thirds of the global seaborne market.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI dropped 1.4 percent to $50.7 a tonne on Wednesday, the biggest decline in two weeks, according to Steel Index. It has tumbled 40 percent this year.
Rebar and iron ore prices at 0713 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
2050
-3.00
-0.15 DALIAN IRON ORE DCE DCIO JAN6
352
-2.50
-0.71 SGX IRON ORE FUTURES SEP
47.5
+0.71
+1.52 THE STEEL INDEX 62 PCT INDEX
50.7
-1.40
-2.69 METAL BULLETIN INDEX
51.76
-0.34
-0.65
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.2095 Chinese yuan)