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Shanghai steel extends losses to third day on trade woes

Shanghai steel futures surrendered early gains to end lower on Thursday, extending losses to a third day, as a growing trade row between China and the United States kept investors on edge.

China’s commerce ministry accused the United States of being temperamental over bilateral trade issues, and warned that the interests of U.S. workers and farmers will ultimately be hurt.

U.S. President Donald Trump had threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliated against his previous target of $50 billion in imports to which China has responded in kind.

The most-active October rebar contract on the Shanghai Futures Exchange closed 0.4 percent lower at 3,773 yuan ($580) a tonne, after rising as much as 1.5 percent.

The price of the construction steel product initially climbed after China’s state radio quoted a cabinet meeting as saying on Wednesday that Beijing will use targeted reduction in banks’ reserve requirement ratios and other monetary policy tools to boost credit support for small firms and keep economic growth steady.

“This is all a positive development for China, to support their domestic economy while at the same time grappling with escalating trade frictions with the United States,” said Helen Lau, analyst at Argonaut Securities in Hong Kong.

Rebar slid 2.9 percent on Tuesday in a broad-based sell-off that also hit iron ore and other commodities amid worries that rising trade tensions between Beijing and Washington could hurt the Chinese economy.

The most-traded September iron ore contract on the Dalian Commodity Exchange gained 0.2 percent to end at 453 yuan a tonne, off the day’s peak of 460.50 yuan.

Coking coal dropped 1.7 percent to 1,184 yuan and coke jumped 1.3 percent to settle at 2,131 yuan, but off the session’s high of 2,170 yuan.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 1.9 percent to $67.69 a tonne on Wednesday, rebounding from the previous day’s two-week low, according to Metal Bulletin.

Source: Reuters

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