Steel reinforcement-bar futures in Shanghai dropped to the lowest level in more than a month as investors cut their exposure to the building material amid signs of tighter Chinese controls on property investment.
Rebar for October delivery dropped by 0.5 percent to 4,016 yuan ($644) a metric ton on the Shanghai Futures Exchange, the lowest price at close for the most-active contract since Jan. 22. Futures lost 5.6 percent last week.
Chinese ministries and local governments may announce detailed rules to tighten control of the property market “soon,” China Securities Journal reported today, citing an unidentified person. Premier Wen Jiabao last week told cities that have had “excessively fast” price gains to impose home-purchase restrictions.
“Expectations for more measures to curb property price gains had an impact on rebar market sentiment,” Dang Man, an analyst at Maike Futures Co., said in a report today. “Prices may decline in the short-term.”
Some of the measures will probably be announced before the National People’s Congress and the Chinese People’s Political Consultative Conference, which begin next week, according to the China Securities Journal report.
Chinese steel mills are ramping up production, increasing pressure on the supply side, according to the industry consultancy Custeel.com. China’s daily crude steel output nationwide in early-February was estimated at 1.99 million tons, up 4.4 percent from the daily output in late-January, Custeel.com said on Feb. 21.
The average spot price for rebar fell 0.7 percent to 3,840 yuan a ton today, according to data from Beijing Antaike Information Development Co. Iron ore for immediate delivery fell 1.7 percent to $153.60 a ton on Feb. 22, according to data compiled by The Steel Index Ltd.