Rebar Drops as Retreating Iron Ore Price Lowers Production Costs

Steel reinforcement-bar futures fell for a second day after iron ore extended a decline from a one- year high, lowering production costs for the material used in housing and construction.

Rebar for delivery in May dropped as much as 1.3 percent to 3,927 yuan ($632) a metric ton on the Shanghai Futures Exchange, and ended the morning session at 3,931 yuan. Futures lost 2.9 percent after touching six-month high of 4047 yuan on Jan. 7.

Spot iron ore at Tianjin port dropped 1.1 percent to $152.90 a dry ton yesterday, according to The Steel Index Ltd. The raw material has lost 3.5 percent after reaching $158.50 on Jan. 8, the highest in more than a year.

“The retreating price of iron ore took away much of the support for higher prices of rebar,” Cai Yuehui, an analyst at Ruida Futures Co., said by phone from Quanzhou. “It makes buyers less willing to stockpile more rebar knowing production costs may fall more.”

Inventory of rebar in China rose to 5.8 million tons on Jan. 11, the highest since Oct. 12, according to data from Shanghai Steelhome Information Technology Co.

The average spot price for rebar fell 0.1 percent to 3,735 yuan a ton yesterday, according to data from Beijing Antaike.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

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

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