Shanghai rebar dips from 6-year high as trade spat escalates

By Reuter – Global Times Source:Reuters-Global Times Published: 2018/8/8 17:33:40

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 the trade row with Washington heats up again.

Benchmark construction rebar steel prices on the Shanghai Futures Exchange edged down 0.1 percent to 4,236 yuan ($620.96) a ton.

Rebar hit a high on Tuesday of 4,266 yuan a ton, 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 tons.

"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 US said it will begin collecting 25 percent tariffs on another $16 billion worth of Chinese goods on August 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 0.2 percent to 503.5 yuan a ton.

The city of Xingtai in North China's Hebei Province, China's No.1 steelmaking province, said it had ordered steel mills, coke producers and utilities to cut production from August 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 tighten over time.

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