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Rebar Drops as Retreating Iron Ore Price Lowers Production Costs

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Jan. 16 (Bloomberg) -- 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 1.1 percent to 3,934 yuan ($633) a metric ton on the Shanghai Futures Exchange. The most-active futures declined 2.8 percent after touching six-month high of 4,047 yuan on Jan. 7.

Spot iron ore at Tianjin port fell for a fourth day, losing 1.1 percent to $152.90 a dry ton yesterday, according to The Steel Index Ltd. That extended the loss to 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, Fujian province. “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 was little changed today at 3,734 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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