News: RIO UPDATE 1-Dalian iron ore futures rise for 3rd day amid supply concerns

• Rio Tinto partially shuts iron ore terminal after fire
• China stimulus measures support iron ore price - analyst
• Outlook for steel demand in Q1 "not rosy" - analyst

(Updates with closing prices, more comments)

China's iron ore futures edged higher on Wednesday, extending gains for a third straight day as traders assessed the disruption to supply following a fire at a Rio Tinto export terminal in Australia.

Rio Tinto (RIO) RIO.L said on Monday it had declared force majeure on iron ore shipments to some customers following the fire at its Cape Lambert export terminal last week.

The most traded iron ore contract on the Dalian Commodity Exchange DCIOcv1 climbed 0.5 percent to 511.5 yuan ($75.61) a tonne, its highest close in the last five sessions. It rose as much as 1.4 percent in early trade.

Helen Lau, an analyst at Argonaut Securities in Hong Kong, said the uptrend in iron ore prices has been driven by both the supply disruption and expectations of a boost in demand for the steel-making raw material from Beijing's moves to stimulate the slowing Chinese economy.

"China's stimulus measures may boost steel production and that will support iron ore demand," she said. "The supply disruption in Australia is adding some supply concern and that explains why the price went up."

Cape Lambert is one of two ports Rio uses to ship iron ore from Australia's Pilbara mining region. The port has an annual iron ore shipping capacity of 205 million tonnes, according to the miner's website.

Coking coal DJMcv1 , however, fell 0.6 percent to 1,231.5 yuan a tonne, extending Tuesday's losses after recent gains. Coke DCJcv1 rose 1.2 percent to 2,034.5 yuan.

The most-active rebar contract on the Shanghai Futures Exchange SRBcv1 ended steady at 3,534 yuan a tonne. Hot rolled coil SHHCv1 was up just 0.4 percent at 3,435 yuan in listless trade.

"There are still some short-term headwinds in the steel market. It's mainly because of the weak (demand) seasonality during the winter time, before the Chinese New Year," Lau said.

While there has been a bit of optimism supporting iron ore prices of late, INTL FCStone commodity consultant Edward Meir said "the situation is not rosy" on the steel side.

"Steel product inventories are rising on account of a halt of work at construction sites in northern China (due to cold weather) and demand is expected to remain weak at least through Q1," he said in his monthly market overview.

Spot iron ore for delivery to China SH-CCN-IRNOR62 was steady at $74.80 a tonne on Tuesday, according to SteelHome consultancy.

($1 = 6.7654 yuan)