June 8, 2018 / 3:29 AM / in 11 days

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

* Dalian iron ore futures down nearly 2 pct

By Manolo Serapio Jr

MANILA, June 8 (Reuters) - Shanghai rebar futures pulled back on Friday, a day after hitting a six-month high, although worries over tighter supply in China at a time when demand remains firm kept price losses in check.

China has sent teams of inspectors to six regions, including the steelmaking hubs of Hebei and Jiangsu 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 rebar on the Shanghai Futures Exchange was down 0.5 percent at 3,800 yuan ($594) a tonne by 0300 GMT, after hitting 3,869 yuan on Thursday, its loftiest since early December.

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

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

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 long steel inventory and total steel inventory digestion rates are stronger than the same period of last year, which suggests that demand in the slow season is still strong,” Morgan Stanley analysts said in a note.

The prospect of limited steel supply amid China’s environmental campaign weighed on futures prices of raw materials iron ore and coking coal.

Iron ore on the Dalian Commodity Exchange slid 1.9 percent to 463.50 yuan a tonne and coking coal fell 0.8 percent to 1,242 yuan.

Spot iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 0.4 percent to $66.84 a tonne on Thursday, a three-week high, according to Metal Bulletin. ($1 = 6.4010 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Gopakumar Warrier)

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