March 9, 2018 / 3:26 AM / a year ago

Shanghai steel skids to 3-1/2 mth low after Trump sets tariffs

* Dalian iron ore also drops to lowest since November

* Chinese industry calls for Beijing to retaliate on U.S. tariffs

* Tit-for-tat trade situation not good for global economy -analyst

By Manolo Serapio Jr

MANILA, March 9 (Reuters) - Chinese steel futures slumped to their weakest level since November on Friday after steel and metals associations in China called on Beijing to retaliate against the United States for slapping hefty tariffs on aluminium and steel imports.

While steel shipments from China account for a small portion of U.S. steel imports, any retaliatory action from China and other countries would not bode well for the global economy, analysts say.

The Chinese steel and metals industry groups appealed to their government “to take resolute measures against imports of some U.S. products” after U.S. President Donald Trump signed off on the imposition of a 25 percent tariff on steel and 10 percent on aluminium to counter cheap imports, especially from China.

“This tit-for-tat situation is not good for the global economy. Across the board, these trade barriers will affect global economic growth,” said Helen Lau, analyst at Argonaut Securities.

The most-active rebar on the Shanghai Futures Exchange fell as much as 4 percent to 3,699 yuan ($583) a tonne, its weakest since Nov. 21. It was trading at 3,717 yuan by 0309 GMT, down 3.5 percent.

“People are also jittery about demand after March,” said Lau. “Inventory has built up quite fast and after March a lot of construction activity will resume, so if demand is slower than expectations, there will be further pressure on prices.”

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

A separate inventory taken by Mysteel consultancy showed steel stocks at Chinese traders topping 10 million tonnes on March 1.

Steel’s price weakness also dragged down raw material iron ore. The most-traded May iron ore on the Dalian Commodity Exchange was last down 4.1 percent at 489 yuan a tonne. It touched 486 yuan earlier, its lowest since Nov. 22.

Amid slow demand, stocks of iron ore at China’s major ports reached a record high 159.1 million tonnes on March 2, SteelHome data showed. SH-TOT-IRONINV

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 3.4 percent to $73.23 a tonne on Thursday, its weakest since Feb. 1, according to Metal Bulletin.

$1 = 6.3435 Chinese yuan Reporting by Manolo Serapio Jr. Editing by Joseph Radford

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