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Shanghai steel slips from six-month top, but losses capped

Reuters  |  MANILA 

By Serapio Jr

MANILA (Reuters) - Shanghai futures pulled back on Friday, a day after hitting a six-month high, although worries over tighter supply in at a time when demand remains firm kept losses in check.

Data showing China's iron ore imports rose 13.5 percent from April to 94.14 million tonnes in May, underlining strong appetite from steel mills, helped pull iron ore prices off the day's lows.

has sent teams of inspectors to six regions, including the steelmaking hubs of and provinces, to review environmental violations that were found during the checks last year. The latest inspections will last until end of June.

Those efforts could limit steel output, traders say, when Chinese demand remains strong.

The most-active on the Shanghai Futures Exchange closed down 0.3 percent at 3,806 yuan ($594) a tonne, after hitting 3,869 yuan on Thursday, its loftiest since early December.

A sustained drop in at Chinese traders pointed to firm consumption in the world's top consumer.

Stocks of construction-used have fallen 46 percent from mid-March to 5.32 million tonnes on June 1, data tracked by SteelHome consultancy showed.

Inventories of hot rolled coil, used in manufacturing, have dropped 77 percent from early March to 2.01 million tonnes last week, according to SteelHome.

"Both and total are stronger than the same period of last year, which suggests that demand in the slow season is still strong," analysts said in a note.

Iron ore on the slid 1.2 percent to settle at 467 yuan a tonne, but above the day's trough of 463 yuan after Chinese import data.

The rise in imports last month reflected robust in as producers remained "very profitable," said

China's also rose, by 6.2 percent from April to 6.88 million tonnes last month, the highest since July 2017.

A recovery in global demand helped spur Chinese steel shipments, said Kevin Bai, despite a global tariff imposed by the

"Exports will remain relatively stable but won't increase significantly mainly because of a better domestic steel market, thanks to the government's supply-side reform," said Bai.

Spot iron ore for delivery to rose 0.4 percent to $66.84 a tonne on Thursday, a three-week high, according to

($1 = 6.4081 Chinese yuan)

(Reporting by Serapio Jr.; Editing by Gopakumar Warrier and Vyas Mohan)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, June 08 2018. 13:19 IST