Shanghai rebar dips from 6-yr high; tradespat escalates

Steel Rebar – Image courtesy of Adobe Stock Photos

BEIJING, Aug 8 (Reuters) – China’s Shanghai rebar pulled back on Wednesday after reaching a more than six-year peak in the previous session, as traders worried high prices may not be supported by physical demand, just as a trade row with Washington heats up.

Benchmark construction rebar steel prices on the Shanghai Futures Exchange closed 0.1 percent lower at 4,236 yuan ($621.52) a tonne.

Rebar hit a high on Tuesday of 4,266 yuan a tonne, the highest since April 2012, on short-covering. Open interest, or the number of positions held by investors, fell to 2.2 million lots by market close, the lowest since late March. One lot equals 10 tonnes.

“Summer remains the off-peak season for steel demand. Downstream users are tending to be cautious when purchasing steel products with prices reaching a fresh record,” said analysts from Sinosteel Futures in a note.

There is not enough momentum to push prices higher without support from actual trading.

On Tuesday, the United States said it will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, the latest move to put pressure on China to negotiate trade concessions.

The most-active iron ore futures on the Dalian Commodity Exchange also fell after three days of gains, dipping 0.6 percent to 509 yuan a tonne.

The city of Xingtai in Hebei province, China’s No.1 steelmaking province, said it had ordered steel mills, coke producers and utilities to cut production from Aug.15 to reduce harmful emissions, potentially curbing demand for steelmaking raw materials.

Ratings agency Fitch said it expected the wider premiums being paid in China for high-quality iron ore and coking coal to persist in the short-term but expects the gap to discounted to tighten over time.

In July, China bought 89.96 million tonnes of iron ore, up 8.1 percent from June, customs data showed on Wednesday, driven by record production and strong margins at steel mills.

Dalian coking coal fell 1.5 percent to 1,208.5 yuan a tonne on Wednesday. Coke futures dipped 2.4 percent to 2,414 yuan a tonne.

($1 = 6.8156 Chinese yuan)

(By Muyu Xu and Josephine Mason; Editing by Sunil Nair)

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