Steel reinforcement-bar futures fell for a second day amid concerns that production is too high at local mills and after a preliminary reading of China’s manufacturing in April trailed estimates.
The contract for October delivery on the Shanghai Futures Exchange declined 1.3 percent to close at 3,600 yuan ($583) a metric ton, the lowest close for the most-active contract since Dec. 6. Futures lost 4 percent last week, the biggest weekly decline since Feb. 22.
A preliminary reading of a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics stood at 50.5. That compares with 51.5 in a Bloomberg News survey, and a final reading of 51.6 in March. China approved more steel-mill capacity yesterday, giving the go-ahead to Shandong Steel Co.’s 8.5 million ton a year plant in Rizhao, according to the National Development and Reform Commission.
“Supply is weighing on market sentiment as demand remains tepid,” Lv Xiaohua, analyst at Everbright Futures Co., said by phone from Shanghai today. “Worries about iron ore prices also depressed sentiment.”
Spot iron ore at Tianjin port was unchanged at $138 a dry ton yesterday, the lowest since April 8, the Steel Index Ltd. data show. Iron ore prices may average $125 a ton in the fourth quarter, compared with a previous estimate of $130 in January, Morgan Stanley said in a report today.
The average spot price for rebar dropped 0.2 percent to 3,578 yuan a ton today, according to the Beijing Antaike Information Development Co.
— With assistance by Feiwen Rong