Shanghai steel contracts hinge on U.S.-China trade war

Hot rolled metal and China rebar futures were higher on Friday as investors hoped the US and China would move closer to a trade deal.

However, futures marked their weakest week in three months.

The leading trade talks between the United States and China concluded the first of two days of trade talks after Chinese Vice Premier Liu He said, "We did it under pressure, a testament to China's greatest sincerity."

Meanwhile, US President Donald Trump said last Thursday that he received a "beautiful letter" from Chinese President Xi Jinping and believes that an agreement has been reached this week.

However, before the second day of scheduled talks, the United States raised duties by $ 200 billion on Chinese goods, applying to shipments leaving China after 0401 GMT on Friday.

Benchmark rebar prices in Shanghai rose 0.5% to 3746 yuan ($ 550.90) per tonne, a record high in the week since mid-February.

Hot rolled coil futures were up 0.5% at 3,682 yuan a tonne.

China's pledge to tighten permits for steel-to-company swaps and ban all new steel capacity in any form also helped support steel prices.

Utilization at steel mills across China fell 1.8 percentage points to 68.78 percent this week as of May 10, according to data compiled by consultancy Mysteel, reflecting increased restrictions on production in the leading steel city of Tangshan.

Steel stocks at Chinese traders fell 273,000 tonnes this week to 12.14 million tonnes, with rebar falling to 6.33 million tonnes and hot rolled coil to 2.13 million tonnes, Mysteel data showed.

The best-selling contract for the supply of iron ore in September on the Dalian Commodity Exchange rose 2.3% to 655.5 yuan.