Rebar Posts Monthly Loss Amid Concern on Local Government DebtBloomberg News
Steel reinforcement-bar futures capped 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 closed little changed at 3,570 yuan ($590) a metric ton today after losing as much as 0.3 percent and gaining as much as 0.5 percent. The most-active contract fell 2.7 percent this month. The commodity used in building dropped 10.5 percent this year.
China’s local-government debt swelled to 17.9 trillion yuan in the six months through June, underscoring risks to the financial system as President Xi Jinping rolls out economic reforms. The country’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 was unchanged at 911 yuan a ton, down 3 percent this month. 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 1 yuan to 3,498 yuan a ton today.
— With assistance by William Bi