Steel reinforcement-bar futures dropped toward the lowest level in five weeks on concern that China’s second cash crunch this year will slow the pace of economic growth, reducing demand for the construction material.
The People’s Bank of China saw the seven-day interbank repurchase rate rise for a seventh straight session On Dec. 23 even after it released more than $49 billion to selected lenders. 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. China is the biggest consumer of rebar, used in housing and railroads.
“Anxiety over liquidity have raised fear in investors, and some have responded by withdrawing from rebar,” Ren Xinlei, an analyst at Luzheng Futures Co., said by phone from Jinan in eastern Shandong province.
China’s economy will expand 7.4 percent in 2014, according to the median estimate of 48 analysts surveyed by Bloomberg News from Dec. 18-23. That would be the slowest pace since 3.8 percent in 1990.
