* Iron ore hits lowest since July 9
* More steel production cutbacks expected due to deep losses
* Steel prices tumble on demand woes
SHANGHAI, Nov 30 (Reuters) - Chinese iron ore futures tumbled more than 3 percent on Monday, hitting their lowest in nearly five months, amid concerns that local steel mills will step up output cuts due to deeper losses, weighing on the steelmaking raw material.
The most active iron ore futures May contract on the Dalian Commodity Exchange DCIOcv1 dropped to a session low of 293 yuan ($45.81) a tonne, its weakest since July 9. Prices were 3.5 percent lower at 294 yuan by 0250 GMT.
Iron ore prices have tumbled 35 percent since the beginning of the year as China's economy cools and construction activity slows in the country.
The seemingly relentless fall is expected to force more steel mills to cut output and reduce inventories of iron ore.
"Chinese steel mills are not restocking iron ore as they are suffering extreme tightness in liquidity and deeper losses from continuous declines in steel prices," said Xia Junyan, an analyst with Everbright Futures in Shanghai.
"Steel demand keeps shrinking, but mills haven't cut output quickly enough, dampening steel prices."
The benchmark rebar futures contract for May delivery on the Shanghai Futures Exchange SRBcv1 tumbled more than 2 percent to 1,623 yuan a tonne on Monday, touching the lowest in decades. They were trading 2.5 percent lower at 1,627 yuan by 0250 GMT.
Rebar prices have lost 41 percent so far this year.
Prices of steel billet, a semi-finished steel product that is widely watched by traders as an indicator for broad steel market, tumbled about 40 yuan to 1,500 yuan a tonne over the weekend, traders said.
The sharp drop in billet prices has fuelled worries that some small steel mills may be forced to shut down permanently.
Meanwhile, the January iron ore contract on the Singapore Exchange /SZZFF6 dropped more than 3 percent to below $40 a tonne on Monday, highlighting increasing worries over demand for the steelmaking ingredient.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 0.2 percent to $43.50 a tonne last Friday, according to the Steel Index. That was near $43.4 hit on Nov. 24, the lowest indices started being compiled in 2008.
Rebar and iron ore prices at 0250 GMT
Contract
Last
Change Pct Change
SHFE REBAR MAY6
1627
-41.00
-2.46
DALIAN IRON ORE DCE DCIO MAY6
294
-10.50
-3.45
SGX IRON ORE FUTURES DEC
41.03
-1.02
-2.43
THE STEEL INDEX 62 PCT INDEX
43.5
-0.10
-0.23
METAL BULLETIN INDEX
44.5
+0.52
+1.18
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3961 Chinese yuan renminbi)