* Spot iron ore back under $40/tonne on Wednesday
* Citi cuts price estimates, sees need to chop supply
By Manolo Serapio Jr
MANILA, Jan 14 (Reuters) - Iron ore futures in China ticked up on Thursday after touching their lowest in nearly a month, although oversupply worries are likely to keep prices of the raw material under pressure.
Citigroup (N:C) slashed its iron ore price estimates for this year through 2018 to as low as $35 a tonne, saying supply needs to be reduced amid declining demand. Sachs sees iron ore averaging at $38 a tonne in 2016 and $35 in 2017. most-traded May iron ore on the Dalian Commodity Exchange DCIOcv1 was up 0.3 percent at 302.50 yuan ($46) a tonne by 0258 GMT, recovering from 298 yuan hit earlier, its lowest since Dec. 18.
On the Singapore Exchange, the most-active February iron ore SZZFG6 dropped 1.2 percent to $37.22 a tonne.
"Looking ahead, we believe iron ore prices (will) remain under pressure because of China's reduced steel production, driven by the campaign of overcapacity reduction," Argonaut Securities analyst Helen Lau said in a note.
As top iron ore suppliers Australia and Brazil continue to lift production, Lau said the seaborne market will remain oversupplied this year.
Citi said roughly 100 million tonnes of global iron ore supply needs to be cut by next year and another 200 million tonnes by 2018 to help balance the market, with the largest curtailments expected to come from Australia followed by Brazil.
Spot iron ore .IO62-CNI=SI lost 40 percent in 2015, marking its third annual decline. It has already fallen more than 8 percent this year.
On Wednesday, iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI dropped 1.8 percent to $39.30 a tonne, according to The Steel Index (TSI). The spot benchmark touched $37 on Dec. 11, the lowest recorded by TSI which began tracking prices in 2008.
Rebar and iron ore prices at 0258 GMT
Contract
Last
Change Pct Change SHFE REBAR MAY6
1744
+1.00
+0.06 DALIAN IRON ORE DCE DCIO MAY6
302.5
+1.00
+0.33 SGX IRON ORE FUTURES FEB
37.22
-0.45
-1.19 THE STEEL INDEX 62 PCT INDEX
39.3
-0.70
-1.75 METAL BULLETIN INDEX
39.51
-1.68
-4.08
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.5875 Chinese yuan)