* U.S.-Sino trade war clouds steel demand outlook
* Trump to meet Xi as China slaps U.S. with new tariffs
* Dalian iron ore extends gains on supply issues
By Enrico Dela Cruz
MANILA, May 14 (Reuters) - China’s steel futures slumped to their lowest in more than five weeks in early trade on Tuesday, extending losses on worries about demand amid heightened trade tensions between Washington and Beijing.
U.S. President Donald Trump said on Monday he would meet Chinese President Xi Jinping next month as the trade war between the world’s two largest economies intensified, sending shivers through global markets.
Iron ore prices, however, remained supported by supply-related issues, with inventory of the steelmaking feedstock at Chinese ports declining steadily while shipments from Brazilian miner Vale SA may remain week in years.
The most-active rebar contract on the Shanghai Futures Exchange fell as much as 1.7 percent to 3,659 yuan ($532.97) a tonne, the construction steel’s lowest since April 8.
Hot rolled coil, used in cars and home appliances, lost as much as 1.6 percent to 3,584 yuan a tonne.
China said on Monday it would impose higher tariffs on most U.S. imports on a revised $60 billion target list, hitting back at a tariff hike by Washington on $200 billion of Chinese goods in a further escalation of a bitter trade war.
“Increasing tariffs on each other’s imports will definitely impact on economic growth of both countries, while a deal to settle their disputes seems very elusive, “ said Helen Lau, analyst at Argonaut Securities in Hong Kong.
“It’s very difficult to speculate if there will be a deal,” she added. “There’s a lot of uncertainties.”
A further economic slowdown in China could mean weaker steel demand, although investor hopes remain that Beijing would ramp up stimulus measures for the domestic economy.
The most traded iron ore on the Dalian Commodity Exchange rose as much as 1.7 percent to 665.5 yuan a tonne.
“It’s a little bit easy to understand why iron ore remains supported. No matter what the situation is, China will still need iron ore, but we know there is a supply deficit,” Lau said.
Vale, China’s top supplier of high-grade iron ore, expects to restore capacity lost after the deadly Brumadinho tailings dam burst within two to three years, executives said on Friday, emphasizing that the company is not rushing to resume full output.
Coking coal edged up 0.4 percent to 1,361.5 yuan a tonne, but coke slipped 1.8 percent to 2,107.5 yuan.
($1 = 6.8653 Chinese yuan)
Reporting by Enrico dela Cruz; Editing by Rashmi Aich