Rebar in Shanghai Closes Near Five-Week Low as Inventory Climbs

Dec 26, 2013 3:08 am ET

Dec. 26 (Bloomberg) -- Steel reinforcement-bar futures closed near a five-week low as inventory increased, while China’s second cash crunch this year reduced investment in the commodity.

Rebar for May delivery on the Shanghai Futures Exchange ended little changed at 3,604 yuan ($594) a metric ton from 3,603 yuan yesterday, which was the lowest close since Nov. 18.

Inventory of five major steel products in China rose 86,100 tons to 13.4 million tons as of Dec. 20, ending a 10-week decline, according to a report yesterday on the website of the China Iron & Steel Association. Demand is declining as cold weather halts more construction projects, while producers are selling because of a liquidity squeeze, the report said.

“Producers are all cutting prices, which increased bearishness, while the cash shortage further weakens the market,” said Shanghai-based analyst Xia Junyan at Wanda Futures Co.

The seven-day repurchase rate, a gauge of funding availability in the banking system, slid today after touching the highest level since June on Dec. 23. Higher volatility in money-market rates and difficulty in obtaining funds among some lenders risk hindering economic growth, already poised to slow to a 24-year low next year.

Iron ore for May delivery on the Dalian Commodity Exchange fell 0.8 percent to 896 yuan a ton. The raw material for immediate delivery at the port of Tianjin tracked by The Steel Index was little changed at $132 a dry ton on Dec. 24.

Rebar for immediate delivery tracked by Beijing Antaike Information Development Co. lost 1.5 percent to 3,468 yuan a ton today.

--William Bi. Editors: Sungwoo Park, Ovais Subhani