Rebar Falls as Quickening Chinese Inflation Seen Limiting Easing

Steel reinforcement-bar futures declined, set for the first weekly loss in six weeks, on speculation that accelerating inflation in China may limit room for easing to support an economic recovery.

Rebar for delivery in May fell as much as 1 percent to 3,982 yuan ($641) a metric ton on the Shanghai Futures Exchange, before trading at 3,987 at 11:25 a.m. local time. Futures, which closed at the highest level since July 9 yesterday, are poised for a 0.1 percent drop this week.

China’s inflation quickened more than forecast to a seven- month high of 2.5 percent in December as the nation’s coldest winter in 28 years pushed up vegetable prices, making further policy loosening less likely, after data yesterday on exports and credit growth underscored the strength of economic rebound.

“The recent rally has already absorbed the strong expectation of an improving Chinese economy,” said Huang Huiwen, an analyst at Shanghai CIFCO Futures Co. “Producer prices indicate that fundamentals are not improving substantially, so any further rally could be difficult.”

Rebar prices surged 14 percent in December, the most since July 2009, as the country’s economy headed for a rebound in the final three months of the year after a seven-quarter slowdown after the government increased infrastructure spending and accelerated investment-project approvals.

The average spot price for rebar fell 0.3 percent to 3,764 yuan a ton yesterday, according to data from Beijing Antaike Information Development Co.

Spot iron ore at Tianjin port dropped 0.2 percent to $158.20 a dry ton yesterday, according to The Steel Index Ltd.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net; Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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