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MANILA: Benchmark Shanghai steel futures fell on Wednesday, with rebar extending losses to a fourth session, as worries grew that the rainy season would slow construction activity in China already hit by COVID-19 restrictions. Data showing signs of an economic recovery in China last month offered little comfort to the ferrous commodity market in the world’s biggest steel producer.

The most-traded October rebar contract on the Shanghai Futures Exchange ended morning trade 1% lower at 4,613 yuan ($686.00) a tonne, after earlier hitting 4,571 yuan, the lowest since May 27.

“Many areas in China entered the rainy season, which affected (activity at) construction sites,” analysts at Sinosteel Futures said in a note.

“The already weak demand may further decline.” The benchmark price of hot-rolled coil, which is steel used in car bodies and appliances, dipped 0.8% on the Shanghai bourse. Stainless steel shed 1%.

The bearish outlook for steel demand in China also dragged down steelmaking inputs, with coke on the Dalian Commodity Exchange falling 2.7%, while coking coal dropped 1.4%.

Despite the sluggish demand, China’s crude steel output rose 4.1% in May compared with a month before, as disruptions from COVID-19 lockdowns around the country gradually eased.

Hopes for further stimulus support to China’s struggling economy helped iron ore rebound from two-week lows, even as the central bank kept its medium-term policy rate unchanged for a fifth straight month, as expected.

“The only engine of economic growth currently is infrastructure investment. Banks may lower the prime rate on June 20 as the possibility of lockdowns remains,” said Iris Pang, ING chief economist for Greater China.

The most-active September iron ore contract on the Dalian bourse rose 0.7% to 901.50 yuan a tonne. On the Singapore Exchange, the front-month July contract climbed 0.3% to $133.60 a tonne.

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