Shanghai rebar extends losses into 5th day after rally on output curbs

Shanghai rebar steel futures dropped nearly 1 percent on Tuesday to fall for a fifth session after last week's push to a seven-year high, but losses were limited by China's efforts to curb output as part of its battle against pollution.

The absence of any breakthrough between the United States and China following talks last week on their escalating trade war also soured sentiment.

On Monday, the U.S. Commerce Department said it had made a preliminary determination that imports of certain steel wheels from China were subsidized and it would impose duties on the product.

The most-traded January rebar on the Shanghai Futures Exchange was down 0.8 percent at 4,225 yuan ($615) a tonne by 0159 GMT. The construction steel product hit 4,418 yuan on Aug. 22, its highest since September 2011.

A rally in Chinese steel prices over the last two weeks has partly been driven by expectations that production restrictions due to expire on Friday in the top steelmaking city of Tangshan in Hebei province could be extended.

Other Chinese cities have been similarly aggressive in implementing industrial production curbs in line with Beijing's anti-pollution campaign.

"We have heard a lot of information from local governments saying that there will be continuous supply-side restrictions. If that happens, there will be some further upside for the steel market," said Kevin Bai, analyst at CRU consultancy in Beijing.

Tuesday's retreat in steel prices also dragged down steelmaking raw materials.

January iron ore on the Dalian Commodity Exchange slipped 0.3 percent to 483 yuan a tonne and coking coal fell 1.2 percent to 1,261 yuan. Coke eased 0.1 percent to 2,523 yuan.

Spot iron ore for delivery to China's Qingdao port <.IO62-CNO=MB> fell 1.8 percent to $65.84 a tonne on Monday, according to Metal Bulletin.

(Reporting by Manolo Serapio Jr. Editing by Joseph Radford).