China's steel rebar recovers after nearly two months losses

China's construction steel rebar prices recovered from early losses on Friday, supported by falling steel inventory, but posted their biggest weekly loss since early July. Weekly stocks of steel products in China fell by 42,400 tonnes to 10.03 million tonnes as of Friday, data from consultancy Mysteel showed, with rebar inventory dropping 1.1 percent to 4.37 million tonnes and hot-rolled coil dipping 0.9 percent to 2.19 million tonnes.
"At this moment, both steel output and steel inventory fluctuate in a small range. Considering impact of environmental measures on steel production is waning ... prices might first go up and then down," said analysts at Orient Futures in a note.
Utilisation rates at steel mills across the country picked up this week after falling for four week. It climbed 0.28 percentage point to 66.44 percent, Mysteel data showed.
Analysts also warned of increasing downward pressure in steel market as investors worry that prices have already reached a high level.
Benchmark Shanghai rebar on Wednesday hit 4,418 yuan ($642.71) a tonne, its highest in nearly seven years. It closed 0.5 percent higher at 4,334 yuan a tonne on Friday.
However, the most-active steel contract marked its worst week since early July, down 1.2 percent, as investors locked in gains. Spot steel prices fell 0.2 percent to 4,626.38 yuan a tonne on Thursday, according to Mysteel.
The US-China trade spat also weighed on steel prices. Officials from Washington and Beijing ended two days of talks on Thursday with no major breakthrough as both side imposed another round of duelling tariffs on $16 billion worth of each country's goods.
Steelmaking raw materials pulled back on Friday on worries that the rally was overdone.
The most-traded coking coal futures on the Dalian Commodity Exchange fell 2.2 percent to 1,290 yuan a tonne on Friday, although stringent environmental checks in major coking coal producing regions curbed output of the fuel.
Coke contract for January delivery lost 0.4 percent to 2,544 yuan a tonne after a report on Wednesday said regulators were probing the industrial association for allegedly monopolising coke prices.
"Prices for coking coal and coke went up too much. Market needs to step back for a while to calm down," said a Shanghai-based trader. However, Dalian iron ore futures edged up after a three-day fall. It gained 0.3 percent to 490.5 yuan a tonne.