* Iron ore rises 1.4 pct in opening trade but ends down 0.2 pct
* Vale shuts Algeria mine after inconclusive stress test
* Potential restart of Brucutu mine still weighs on prices-analyst
* Steel prices dip; coke and coking coal edge higher (Adds closing prices)
BEIJING, March 21 - Chinese iron ore prices failed to hold onto early gains on Thursday as the potential restart of a large Vale mine outweighed the shutdown of one of the Brazilian firm’s smaller projects.
Vale said on Wednesday it had decided to halt operations at its Alegria mine in Minas Gerais state after a stress test failed to guarantee stability. It said the impact on iron ore production is seen at 10 million tonnes per year.
“We do not expect an extended closure at Alegria, but this announcement is further evidence of the risk and uncertainty around Brazilian iron ore supply,” Jefferies said in a note, putting Vale’s announced or anticipated mine closures since a deadly accident in January at over 90 million tonnes per year.
Vale said on Tuesday that a local court had cleared the way for it to resume operations at its Brucutu mine, where production has been halted since the collapse of a dam that killed some 300 people.
The most traded iron ore contract on the Dalian Commodity Exchange rose as much as 1.4 percent to 622 yuan ($93.18) a tonne in opening trade before closing down 0.2 percent at 612 yuan, its lowest close since March 13.
It closed 3.7 percent lower on Wednesday on news that Vale was set to resume operations at the 30-million-tonnes-per-year Brucutu mine, its largest in Minas Gerais.
“The previous day’s news is still having an impact,” said Zhao Xiaobo, an analyst with Sinosteel Futures in Beijing.
Dalian iron ore has gained 24.4 percent this year on fears of supply constraints after the dam collapse on Jan. 25.
Meanwhile, the most-active steel rebar contract on the Shanghai Futures Exchange rose as much as 1.2 percent to a one-week high of 3,826 yuan a tonne before closing down 0.3 percent at 3,772 yuan a tonne, while hot-rolled coil closed down 0.3 percent at 3,692 yuan.
“In accordance with the end of the heating season and environmental restrictions, steel mills are continuing to restore production and steel product output is steadily rising,” Zhao said.
The peak winter heating season in northern China runs from Nov. 15 to March 15.
Among the other steelmaking raw materials, coke and coking coal both closed up 0.3 percent at 1,971.50 yuan and 1,233.50 yuan, respectively. ($1 = 6.6755 Chinese yuan) (Reporting by Tom Daly; Editing by Subhranshu Sahu and Shreejay Sinha)