Steel reinforcement-bar futures swung between gains and losses, heading for a monthly decline, amid speculation that rising local government debt may prompt China to rein in spending.
Rebar for May delivery on the Shanghai Futures Exchange lost as much as 0.3 percent and gained as much as 0.2 percent before trading little changed at 3,574 yuan ($590) a metric ton at 10:56 a.m. Beijing time. The most-active contract fell 2.7 percent this month, bringing losses this year to 10 percent.
China’s local-government debt swelled to 17.9 trillion yuan ($2.95 trillion) in the six months through June, underscoring risks to the financial system as President Xi Jinping rolls out economic reforms. China’s leaders pledged last month to speed up urbanization as part of a package of policies that represent the biggest expansion of economic freedoms since at least the 1990s. Premier Li Keqiang has championed the strategy as a “huge engine” for growth.
“Investors are concerned things are looking to get worse before the much-touted reform measures can deliver any noticeable improvement,” said Xia Caijun, an analyst at GF Futures Co. in Guangzhou.
The eastern province of Jiangsu plans to reduce steel-making capacities by 7 million tons starting 2014, the Xinhua Daily reported yesterday, citing the government.
Iron ore for May delivery on the Dalian Commodity Exchange dropped 0.2 percent to 909 yuan a ton. The contract for immediate delivery at the port of Tianjin tracked by The Steel Index gained 0.2 percent to $134.20 a dry ton yesterday.
Rebar for immediate delivery tracked by Beijing Antaike Information Development Co. fell 0.2 percent to 3,499 yuan a ton yesterday.
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