Rebar Rises Most in Three Weeks on China Stimulus Speculation

Steel reinforcement-bar futures in Shanghai rose today amid speculation that China will take steps to bolster the economy after a manufacturing index unexpectedly fell yesterday.

Rebar for October delivery on the Shanghai Futures Exchange rose by 2.3 percent to close at 3,287 yuan ($531) a metric ton, the biggest gain for a most-active contract since March 3. Futures yesterday fell to the lowest close since the contracts began in 2009.

A Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics dropped to an eight-month low in March at 48.1, a preliminary report showed, stoking speculation that policy makers in Asia’s largest economy will act to sustain jobs and growth. China may announce investment projects and reforms of state-owned companies as the slowdown threatens Premier Li Keqiang’s 7.5 percent economic growth target for this year, Barclays Plc said in a report.

“Judged from past experience, when readings of the HSBC PMI index fall to 47-48, the Chinese government follows up,” said Hu Xiaodong, an analyst at Nanhua Futures Co. in Hangzhou. Hu cited higher spending on infrastructure and social housing projects as areas the government may look at.

A recovery in seasonal demand also helped absorb some rebar stockpiles, Hu said. Inventory in China dropped 2.9 percent last week to 9.15 million tons, the lowest since Feb. 14, according to data tracked by Shanghai Steelhome Information Technology Co.

Iron ore futures for September delivery on the Dalian Commodity Exchange rose 2 percent to close at 759 yuan a ton. Spot ore at China’s Tianjin port fell 0.2 percent to $110.50 a dry ton yesterday.

Rebar for immediate delivery tracked by Beijing Antaike Information Technology Development Co. fell 0.1 percent today to 3,267 yuan a ton. Hot-rolled coil futures for October delivery in Shanghai gained 1.4 percent to close at 3,378 yuan a ton.

Over-the-counter iron ore swaps for April delivery in Singapore rose 1.3 percent to $110.08 a ton yesterday.

— With assistance by Feiwen Rong

Before it's here, it's on the Bloomberg Terminal.