* Shanghai rebar hits highest in nearly 8 years
* Hot rolled coil extends record-setting rally
* Dalian iron ore slips for 2nd straight day
By Enrico Dela Cruz
MANILA, June 25 (Reuters) - Prices of construction product rebar and hot rolled coil rallied for a fifth session on Tuesday, underpinned by output restrictions in the world’s top steel producer as it tries to curb pollution.
A pick-up in steel demand and the high cost of raw materials, especially iron ore, gave prices a further boost, traders said.
The most-actively traded October rebar contract on the Shanghai Futures Exchange rose as much as 2.0% to 3,988 yuan ($580.33) a tonne, its highest since August 2011.
Hot rolled coil, which is used in cars and home appliances, jumped as much as 2.2% to a record-high 3,935 yuan a tonne.
Persistently high industrial gas pollution levels in China’s top steelmaking city Tangshan have prompted local authorities to impose a new set of output curbs on producers, some of which will have to halve their production in the next few weeks.
The restrictions, which will be in place until Aug. 1, come at a time when steel inventories in China are significantly lower than the highs seen between February and March.
Their removal, however, will depend on air quality conditions at the time, according to the local government-backed Tangshan Labour Daily.
“Some customers and traders are saying the (steel) inventory is a little bit low, so there’s an additional demand that pushes prices even higher,” said a Shanghai-based steel trader.
“At the same time, some steel mills are also trying to lift their prices up because of the high cost of raw materials, especially iron ore,” the trader said.
China’s steel output curbs, however, could dampen demand for steelmaking raw materials.
The most-actively traded September iron ore contract on the Dalian Commodity Exchange was down 0.3% at 805.5 yuan a tonne as of 0240 GMT.
Dalian iron ore hit a record 837 yuan a tonne last week, buoyed by a shrinking stockpile at China’s ports as shipments from No. 2 supplier Brazil declined in the wake of mine closures following a deadly tailings dam burst in January.
Dalian coking coal futures edged down 0.5% to 1,374 yuan a tonne, while coke futures slipped 1.2% to 2,064 yuan.
($1 = 6.8720 yuan)
Reporting by Enrico dela Cruz; editing by Richard Pullin