China’s steel and iron ore futures dipped on Wednesday after hitting a multi-week high in the previous session, as market remained fretted about the renewed U.S.-China trade tension.
U.S. officials have accused China of reneging in the past week on substantial commitments made during months of negotiation aimed at ending the trade war.
China’s Commerce Ministry said on Tuesday that Vice Premier Liu He will travel to Washington for two days of trade talks this week, while the higher tariffs, issued by President Trump on Sunday, will take place right in the middle of Liu’s visit.
Benchmark Shanghai rebar prices fell 1 percent to 3,746 yuan ($553.34) a tonne as of 0206 GMT.
Hot-rolled coil lost 1 percent to 3,706 yuan.
“Traders are also getting cautious over the expectation of waning demand in the coming weeks amid slower pace of destocking,” said analysts from CITIC Futures in a note in Mandarin.
Steel product inventory at Chinese traders reduced 31,000 tonnes to 12.41 million tonnes last week, according to data compiled by Mysteel consultancy.
Steel demand typically weakens during summers in China as high temperatures and continuous rain slow down construction activities.
The most-liquid iron ore futures on the Dalian Commodity Exchange also dropped on Wednesday but prices were able to find some supports in the wake of Vale’s announcement of halting resumption of its Brucutu mine, a key iron ore mine with annual capacity of 30 million tonnes.
It was down 0.7 percent to 646 yuan a tonne.
Vale has closed 92.8 million tonnes of its 400-million-tonne annual iron ore mining capacity after a tailing dam disaster in late January.
“We expect most of these closures to persist into 2020. The impact of this unprecedented supply shock on the iron ore market will intensify as inventories continue to fall,” said analysts from Jefferies in a note.
Dalian coking coal edged 0.2 percent lower at 1,367.5 yuan a tonne, while coke rose 1.2 percent to 2,126.5 yuan following a wave of price rally in spot market.
Reporting by Muyu Xu and Dominique Patton; Editing by Rashmi Aich