* U.S.-Sino trade war clouds steel demand outlook
* Trump to meet Xi as China slaps U.S. with new tariffs
* Iron ore, other steelmaking raw materials fall (Updates with closing prices, graphic)
By Enrico Dela Cruz
MANILA, May 14 (Reuters) - Chinese steel futures slumped to their lowest in more than five weeks on Tuesday as worries persist about demand amid heightened U.S.-Sino trade tensions, even as the two sides expressed optimism in resolving their dispute.
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.
China and the United States both have the “ability and wisdom” to reach a trade deal that is good for both, according to Chinese State Councillor Wang Yi, while Trump said he thought recent talks in Beijing would be successful.
Concerns over steel demand slowing in China weighed on steelmaking raw materials, with iron ore erasing gains made earlier in the session.
The most-active rebar contract on the Shanghai Futures Exchange closed 1.6 percent lower at 3,663 yuan ($532.94) a tonne, just above the day’s low of 3,655 yuan, the construction steel’s lowest since April 8.
Hot rolled coil, used in cars and home appliances, also trimmed losses to close 1.3 percent down at 3,595 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 contract on the Dalian Commodity Exchange ended 1.5 percent lower at 644.5 yuan a tonne, after gaining as much as 1.7 percent earlier in the session.
“No matter what the situation is, China will still need iron ore, but we know there is a supply deficit,” Lau said.
Iron ore inventory at Chinese ports SH-TOT-IRONINV has been declining steadily, while shipments from Brazilian miner Vale SA looks set to remain weak for a long period.
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.
Chinese steelmakers are regaining their appetite for high-grade iron ore despite record-high ore prices, as recovering profit margins spur plants to seek efficiency gains and ramp up output.
Coking coal fell 1.4 percent to 1,337 yuan a tonne, while coke slid 2.6 percent to 2,091 yuan.
($1 = 6.8732 Chinese yuan)
Reporting by Enrico dela Cruz; Editing by Rashmi Aich