Cancelo spent the second half of last season on loan at Bayern Munich, but manager Thomas Tuchel is not interested in going back in for the Portuguese international this summer.
The 29-year-old is not wanted at City either after a well-publicised falling out between himself and Pep Guardiola which led to his move to Bayern.
However, Spanish outlet Sport claims that Barca have no interest in pursuing what would be such an expensive deal for somebody who would only be arriving on loan.
The Catalan club are said to be waiting to see if the player forces a move, but for now, with City calm over negotiations and not allowing Cancelo to leave on the cheap, Barca will look at other options.
That may offer a route back into the Barca setup for Sergino Dest, who has returned following a disappointing loan spell at AC Milan.
Marca claims that Dest is the only remaining member of a group of five players that were set to move on but has not yet done so or agreed terms elsewhere.
Samuel Umtiti and Francisco Trincao have both already left while Clement Lenglet and Alex Collado are expected to join them out the door.
So with Dest's immediate future not clear, it could see him given an opportunity during pre-season to work his way back into the fold.
It would certainly only be as backup though given the number of players Barca already have who can operate in full-back areas.
The recent signing of Inigo Martinez at centre-back means Marcos Alonso may be able to play as a left-back more frequently this campaign, sharing duties with Alex Balde, while Jules Kounde and Sergi Roberto are both options on the other flank.
Dest returns after a frustrating spell in Italy which saw him hardly get a look in under Stefano Pioli.
Despite formation changes from four to three-at-the-back midway through the season, Dest still could not force his way into the side regardless of the system in place.
Davide Calabria was preferred as an out-and-out right-back, while Alexis Saelemaekers and Junior Messias were chosen ahead of him as wing-backs.
Dest's last appearance for the club came in a 4-0 thrashing at Lazio in January when he deputised for an injured Theo Hernandez at left-back.
The US international has played just three matches since, all of which came for his country.