Rebar Drops as Slump in Iron Price Reduces Production Costs

Steel reinforcement-bar futures fell for a third day in China after the price of iron ore slumped, reducing production costs for the alloy used for railways and buildings.

Rebar for delivery in May dropped as much as 0.9 percent to 3,899 yuan ($627) a metric ton on the Shanghai Futures Exchange. It traded 3,909 yuan at the end of the morning trading session.

Spot iron ore at Tianjin port, a benchmark for the raw material, fell for a fifth straight day yesterday, dropping 4.9 percent to $145.40 a ton, according to The Steel Index Ltd. That extended the loss to 8.3 percent after peaking $158.50 on Jan. 8, the highest in more than a year.

“The pull-back in iron ore prices took away a key support for rebar prices,” Wang Yangqing, analyst at Nanhua Futures Co., said by phone from Hangzhou. “There are no significant fundamental changes to support a further rally, so the market is forced to look at the weak physical market.”

Rebar inventory on Jan. 11 climbed 2.4 percent from a week earlier to 5.8 million tons, according to Shanghai Steelhome Information Technology Co. The average spot price for rebar was little changed at 3,733 yuan a ton, according to data from Beijing Antaike Information Development Co.

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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