* Rebar set to drop 8.9 pct in 1Q, 14 pct for March
* Iron ore futures to fall 17.4 pct in 1Q
* Rebar, iron ore stockpiles weigh on prices
MELBOURNE, March 29 (Reuters) - Dalian iron ore was steady on Thursday but still facing its biggest quarterly loss since 2015 as fears of an escalating trade spat between China and the United States roiled demand expectations, and inventories rose.
China’s Ministry of Commerce said on Thursday the U.S. approach on trade sets a bad precedent that could trigger a domino effect and the U.S. must stop its wrong actions and withdraw from its unilateralism.
U.S. tariffs on Chinese goods may not be imposed until early June, administration officials said on Wednesday, with public consultations and potential tariff revisions buying time for negotiations to forestall them.
Worries about China’s retaliation leading to the imposition of tariffs across the globe had raised headwinds for commodities demand, said analyst Helen Lau of broker Argonaut Securities in Hong Kong.
That was worsening the outlook for steel where inventories were already high in China and production was increasing after China’s pollution controls expired on March 15, she said.
“The lifting of production restrictions during the winter time has brought back concerns about oversupply, and now pollution has come back to Beijing. The pollution is a sign of production ramp up,” she said. “It seems that the seasonal demand recovery has yet to arrive in China. If April demand does not pick up quickly then summer could be a big negative for the markets.”
The most active rebar on the Shanghai Futures Exchange rose 0.6 percent to 3,456 yuan ($549) a tonne by 0313 GMT, but was set for an 8.9 percent drop for the first quarter, its first quarterly decline since the fourth quarter of 2015.
The quarterly drop was led by a 14 percent decline in March.
Rebar inventories rose to their highest since April 2013 in the week ending March 16, according to data from SteelHome, but have decline some since then and stand at 949,470 tonnes. SH-TOT-RBARINV
Iron ore on the Dalian Commodity Exchange traded at 438 yuan a tonne, and was set for its steepest quarterly drop since the third quarter of 2015 at 17.4 percent.
Shanghai iron ore port stocks have surged to more than 160 million tonnes, a record high and have doubled in size since late 2015. SH-TOT-IRONINV
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB according to Metal Bulletin, fell 3 percent to $63.12 a tonne on Wednesday. The raw material was set for a 13 percent quarterly loss, its biggest in three quarters. Coke fell 1.9 percent to 1,763.50 yuan while coking coal slipped 2.6 percent to 1,203 yuan.
$1 = 6.2943 Chinese yuan renminbi Reporting by Melanie Burton; Editing by Christian Schmollinger