Rebar futures slump for five straight days as authorities call to dampen speculation

Rebar futures prices slumped for five days in a row amid the central government’s call to dampen speculation and on the Shanghai Futures Exchange’s raising its transaction fee.

The most traded rebar contract for January, 2018 delivery fell to 3,707 yuan (US$554) per ton today from 4,006 yuan per ton last Wednesday, a 7.5 percent drop in the past five trading days. Rebar is a steel product mainly used in concrete for construction.

Following the price decline in the futures market, rebar in the spot market also dropped, with its average domestic price losing 54 yuan from a week earlier to 4,167 yuan per ton, according to the steel price index at Lange Steel Information Center, a domestic steel industry consultancy.

While rebar futures price has soared 36.3 percent since June 1, when the latest rebound started, the growth ended on Thursday when the China Iron and Steel Industry Association said the surge in domestic steel prices was caused by speculation.

The futures exchange then announced on Friday that the transaction fee on two rebar futures contracts will be raised to 0.05 percent from 0.01 percent. The higher fee takes effect today.

“The market responded swiftly to the action as the government has shown great resolve to cool steel prices,” said Wang Guoqing, research director at Lange .

The action means China will tighten steel trading while continuing with efforts to cut supply in the near future, she added.