Rebar Posts Worst Week in a Month on China Cash Crunch Concerns

Dec 20, 2013 3:59 am ET

Dec. 20 (Bloomberg) -- Steel reinforcement-bar futures in Shanghai declined for a second week as funding costs in China surged amid the worst cash crunch since June.

Rebar for May delivery on the Shanghai Futures Exchange retreated 0.7 percent to close at 3,627 yuan ($597) a metric ton. The most-active contract lost 1.3 percent this week, the biggest drop since the week ended Nov. 15.

The seven-day repurchase rate, a gauge of liquidity in the financial system, jumped 116 basis points to 8.2144 percent in Shanghai, the highest since June, according to a daily fixing by the National Interbank Funding Center. The People’s Bank of China conducted short-term liquidity operations recently, it said on its microblog yesterday, without giving details of the recipients, the amount or rate it charged for the financing.

“Financial markets were spooked by the central bank,” said Zheng Ge, an analyst at Wanda Futures Co. in Beijing. “Everyone’s scared of a repeat of the cash crunch in June.”

Iron ore for May delivery on the Dalian Commodity Exchange fell 0.3 percent to close 905 yuan a ton today. The contract earlier touched 901 yuan a ton, the lowest since its Oct. 18 debut. The commodity for immediate delivery at the port of Tianjin tracked by The Steel Index dropped 0.5 percent yesterday to $132.70 a dry ton, the lowest since Oct. 31.

Rebar for immediate delivery tracked by Beijing Antaike Information Development Co. declined 0.3 percent to 3,544 yuan a ton today.

--Feiwen Rong. Editors: Sungwoo Park, Thomas Kutty Abraham