Steel reinforcement-bar futures in Shanghai fell from the highest level in almost nine months on concern that demand for the construction material is weaker in the spot market.
Rebar for delivery in May fell by as much as 0.9 percent to 4,185 yuan ($671) a metric ton on the Shanghai Futures Exchange, before trading at 4,199 at 10:03 a.m. local time. The contract rose to 4,235 yuan yesterday, the highest since May 7.
The average spot price for rebar rose 2.9 percent in the past month, lagging behind the 5.2 percent gain in futures prices. The gap between the two prices has become too wide, encouraging selling of futures before the Chinese Lunar New Year holiday beginning Feb. 9, Zhang Xin, analyst at Yongan Futures Co., said in a report today.
“The bulls’ excuse for a rally in the futures prices was a rosy demand outlook,” Zhang said. “Despite signs of economic recovery, investors are still unsure whether rebar demand will really turn around after the holiday.”
Spot iron ore at Tianjin port rose for a fourth day yesterday, advancing 0.7 percent to $154.20 a dry ton, according to The Steel Index Ltd. The average spot price for rebar gained 0.7 percent to 3,782 yuan a ton yesterday, according to data from Beijing Antaike Information Development Co.
To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at email@example.com
To contact the editor responsible for this story: Brett Miller at firstname.lastname@example.org