* Hot-rolled coil hits record high
* Daily steel output at major mills rose over Aug 1-10 - CISA
* Steel inventory at mills also higher -CISA
* Shagang raised rebar prices by 150 yuan, lower than market expectation (add spot prices adjustment at Shagang, Tangshan production curbs, update closing prices)
BEIJING, Aug 21 (Reuters) - Shanghai rebar steel futures retreated from early gains on Tuesday although worries about possible tight supply because of strengthened production restrictions across the country remained.
The most-active construction steel rebar futures closed 0.2 percent lower at 4,337 yuan ($630.93) a tonne. It hit a 7-year-peak of 4,413 yuan a tonne in the previous session.
Since Friday, concerns about stepped-up environmental measures in the top steelmaking city of Tangshan in Hebei province and in the No.2 steelmaking province of Jiangsu have driven up rebar prices by nearly 5 percent.
However, steel mills and industrial associations in the regions told Reuters they have not received any further notices on production curbs from the government.
“Constant market news on production curbs and expectations of reviving demand in the autumn season have led to madness in the steel market,” analysts from Orient Futures said in a note.
“Many regions have already enforced output restriction requirements and further policies may not have more impact on the market, but in the short-term investors could go even crazier,” they said, adding that further moves would be unsustainable.
Jiangsu Shagang Group, the country’s biggest private-owned steel mill, on Tuesday raised its rebar prices by 150 yuan a tonne to 4,570 yuan a tonne for Aug. 21 to 31. However, the price adjustment is lower than market expectation of 200 yuan a tonne, which indicates prices rally on steel may start to slow.
Hot-rolled coil futures on the Shanghai Futures Exchange hit a record 4,369 yuan a tonne during early trade on Tuesday. It was up 0.8 percent to 4,282 yuan a tonne when market closed.
Average daily crude steel output at major steel companies over Aug. 1 to 10 rose 1.6 percent to 1.94 million tonnes compared with July 21 to 31, according to China’s Iron & Steel Association (CISA), fuelled by near-record-high profit margins at steel mills across the country.
Steel inventory at mills also increased over the same period, up 4.4 percent to 11.94 million tonnes, CISA data showed.
Steelmaking raw materials dipped after two days of increases, curbed by expectations of falling demand due to stringent production curbs at steel mills.
The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange fell 2.1 percent to 494 yuan a tonne.
Dalian coke futures fell as much as 5.1 percent to 2,529 yuan a tonne, its lowest since March 23, although spot prices rose by 100 yuan a tonne due to environmental inspections in the major coke producing hub of Shanxi province.
Coking coal prices also dipped on Tuesday, falling 1.6 percent to 1,289.5 yuan a tonne.
The government of Tangshan said on Tuesday it will enforce emergency pollution reduction measures from Aug. 21 to 27 and had asked steel mills to halve their production capacity of sintering machines, shaft furnaces and lime kilns. ($1 = 6.8740 Chinese yuan renminbi) (Reporting by Muyu Xu and Josephine Mason; editing by Richard Pullin)