China iron ore falls for 6th day to 1-mth low, down 3.1 pct on wk

* Imported iron ore prices fall to lowest point since June

24

* Rebar futures down for eighth session in row

* Goldman Sachs (NYSE: GS-PB - news) says China unlikely to absorb all new

foreign supplies

By David Stanway

BEIJING, July 25 (Reuters) - The price of imported iron ore

sold in China fell for the sixth consecutive day to reach its

lowest point in a month, with few positive signs to encourage

buyers to make purchases.

Iron ore with 62 percent grades for immediate delivery into

China dipped 0.74 percent to $93.6 per tonne on

Thursday, according to data provider The Steel Index. It has

dropped 3.1 percent since last Friday.

"We are not active at all these days," said a manager with

an iron ore trading firm based in Beijing. "Still, I don't

personally think prices will fall much further and it should

pick up again in August."

With the world's biggest steel market more dependent on the

fortunes of the property sector than on factory output, prices

have failed to respond to better manufacturing data this week.

Rebar prices on the Shanghai Futures Exchange

inched up 0.2 percent to 3,048 yuan ($490) per tonne, ending

seven consecutive daily declines. The most-active iron ore

contract for September delivery on the Dalian Commodity Exchange

ended Friday up 0.4 percent at 679 yuan a tonne.

Analysts continue to hold out hope that China's steel sector

will come out leaner and stronger after a difficult

restructuring period.

"If the economy adjusts in accordance with the requirements

of the central government, then the performance of the steel

sector in the second half of the year will be better than in the

first," said China Iron and Steel Association analyst Xue Heping

a research report issued this week.

"It is expected that Chinese mills will see a gradual exit

from their difficulties starting from this year," Xue added.

But industry officials have warned that any recent

improvement in the profits of steel firms was down simply to

declining iron ore prices, which have been eroded by oversupply.

Big global miners like Rio Tinto (Xetra: 855018 - news) and BHP

Billiton have ramped up production to record

levels in the first half of this year.

But despite expectations that a 30 percent drop in global

prices would lay waste to China's own high-cost ore producers,

domestic output grew 9.9 percent to 710.6 million tonnes in the

first half of 2014.

Goldman Sachs said in a note on Thursday that while Chinese

iron ore production was still likely to dip from the high levels

of the first half, global producers have overestimated China's

ability to absorb the increase in seaborne supplies.

"We continue to believe that the market is underestimating

the downside risk that China will not absorb every tonne of

incremental seaborne supply, and a material amount of seaborne

capacity will eventually have to close," Goldman Sachs said.

The most recent data from China's National Bureau of

Statistics showed that the year-on-year growth rate in iron ore

production slowed from more than 12 percent in April and May to

7.3 percent in June. It also indicated that marginal producers

in some regions have felt the pinch, with output in Inner

Mongolia dropping 17 percent and Shaanxi 27 percent in June.

Goldman Sachs said production from Hebei - China's biggest

steel producing region that is responsible for more than a third

of the country's total iron ore output - could be the next to

fall off because its marginal costs are higher than elsewhere,

but it would not be enough.

"In our view, the closure of high-cost mines in coastal

provinces will not be sufficient to fully absorb the growing

surplus, leading to greater competition among seaborne producers

going into 2015," it said.

Rebar and iron ore prices at 0701 GMT

Contract Last Change Pct Change

SHFE REBAR JAN5 3048 +6.00 +0.20

DALIAN IRON ORE DCE DCIO SEP4 679 +3.00 +0.44

SGX IRON ORE FUTURES AUG 93.41 +0.53 +0.57

THE STEEL INDEX 62 PCT INDEX 93.6 -0.70 -0.74

METAL BULLETIN INDEX 94.02 +0.03 +0.03

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

($1 = 6.1940 Chinese Yuan)

(Editing by Michael Perry)