March 29, 2018 / 7:54 AM / 4 months ago

UPDATE 1-China rebar set for first quarterly loss since 2015 as surplus grows

* Rebar on course to drop 8.3 pct in Q1, 13.4 pct in March

* Iron ore futures down 16.8 pct in Q1

* Rebar, iron ore stockpiles weigh on prices (Updates prices)

MELBOURNE, March 29 (Reuters) - Dalian iron climbed 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 closed 1.4 percent higher at 3,456 yuan ($549.50) a tonne, but was set for an 8.3 percent drop for the first quarter, its first quarterly decline since the fourth quarter of 2015.

The quarterly drop is led by a 13.4 percent decline so far 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 closed up 1 percent at 441 yuan a tonne, but was still on course for its steepest quarterly drop since the third quarter of 2015 at 16.8 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 closed down 1 percent at 1,778.50 yuan, while coking coal ended up 1.3 percent at 1,251 yuan. ($1 = 6.2893 Chinese yuan) (Reporting by Melanie Burton; Editing by Christian Schmollinger and Subhranshu Sahu)

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