* Dalian iron ore rise to daily trading limit at market open
* Analysts expect Vale’s Brazil dam accident to affect more output
* Top steelmaking city Tangshan to curb steel output in Apr-Sept
BEIJING, Feb 11 (Reuters) - China iron ore futures rose to a record on Monday, the first session after a week-long national holiday, on concerns that supply from Brazil, the country’s second-largest ore supplier, may decline after a fatal dam accident at a Vale SA mine.
The most-active iron ore futures for May delivery on the Dalian Commodity Exchange rose to their daily trading limit when the market opened at 0100 GMT, hitting a record of 652 yuan ($96.30) a tonne.
Contracts for March, July, September and November delivery also climbed to their daily limit during early trade on Monday.
“Price hiking today is driven by both real supply gap and speculative sentiment among investors,” said a Shanghai-based iron ore trader.
The Brazilian government last week ordered Vale to stop using eight dams used to hold tailing, or mine waste, after a dam collapsed on Jan. 25 at its Corrego do Feijao mine that likely killed more than 300 people, the country’s worst mining disaster.
The closures will affect production of 9 percent of the company’s annual iron ore output and caused Vale to declare force majeure, a legal ruling that means the company is unable to fulfil its contracts due to unforeseen circumstances, on its export contracts.
Analysts have revised their forecasts of affected iron ore output to 70 million tonnes from 40 million tonnes two weeks ago.
“It is hard for Vale to resume normal operation in the short term. The widened supply gap will...intensify conflicts on the fundamental basis and push up prices in the market,” said analysts from Jinrui Futures in a note.
Benchmark construction steel rebar prices on the Shanghai Futures Exchange (ShFE) also surged on Monday, gaining more than 3 percent to a daily high of 3,870 yuan a tonne, the highest in five months, as traders expect short supply in the coming months.
The most-active hot-rolled coil futures on the ShFE rose 3 percent to 3,736 yuan a tonne as of 0220 GMT.
China’s top steelmaking city Tangshan will impose production restrictions on its heavy industry from April to September in order to improve its air quality. Steel mills in the city will be ordered to halve sintering production, a process that prepares raw iron ore for smelting into steel, and to continue enforcing operation curbs on blast furnaces.
Dalian coking coal dipped 0.6 percent to 1,268 yuan a tonne, while coke contract gained 1.5 percent to 2,111 yuan a tonne.
($1 = 6.7705 Chinese yuan renminbi)
Reporting by Muyu Xu and Dominique Patton; editing by Christian Schmollinger