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UPDATE 1-Shanghai steel slips after 5-day rally, limited impact from Trump plan

Published 02/03/2018, 06:33 pm
Updated 02/03/2018, 06:40 pm
© Reuters.  UPDATE 1-Shanghai steel slips after 5-day rally, limited impact from Trump plan

* Dalian iron ore, coking coal also retreat

* Trump to slap steep tariffs on steel, aluminium imports

* China accounts for a fraction of U.S. steel imports (Updates prices)

By Manolo Serapio Jr

MANILA, March 2 (Reuters) - Chinese steel futures retreatedon Friday after a five-day rally as ample inventories of thebuilding material weighed, with little impact on marketsentiment from U.S. President Donald Trump's plan to imposehefty tariffs on imported steel.

Trump said the duties of 25 percent on steel and 10 percenton aluminum would be formally announced next week, but worriesthat the plan could fuel a global trade war weighed on Asianequities. is the world's biggest steel producer, but accountsfor only about 1-2 percent of steel imports by the UnitedStates, the world's top buyer.

"Chinese direct steel exports to the U.S. market are verylimited," said Richard Lu, analyst at CRU consultancy.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed down 0.3 percent at 4,024 yuan ($634) a tonne,after touching a nearly three-year peak of 4,062 yuan onThursday.

"The high steel inventory is weighing on prices at themoment," said Lu.

Lu said Chinese steel demand has yet to pick up after theweek-long Lunar New Year break last month, with constructionactivity only expected to gradually resume from Friday.

Inventory of construction steel product rebar reached 7.13million tonnes on Feb. 23, the most since March last year, datacompiled by SteelHome consultancy showed. SH-TOT-RBARINV

Expectations that more Chinese cities could curb steeloutput after top steel-producing Tangshan announced it wouldextend production restrictions beyond the end of the heatingseason on March 15 had buoyed steel prices this week, with rawmaterials iron ore and coking coal also hitting multi-weekhighs. steel's pullback on Friday also weighed on iron ore andcoking coal prices.

The most-traded iron ore on the Dalian Commodity Exchange DCIOcv1 fell 0.9 percent to 539 yuan a tonne and coking coal DJMcv1 dropped 0.6 percent to 1,394 yuan. Coke dipped 0.5percent to 2,242 yuan per tonne.

Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 1 percent to $79.39 a tonne on Thursday, its loftiest sinceAug. 22, according to Metal Bulletin, tracking the strength inthe futures market.

($1 = 6.3452 Chinese yuan)

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