Rebar futures prices slumped over 100 yuan (.26) per ton yesterday following a rebound in supply and ebbing investment.
The most traded rebar contract for January delivery plunged 2.96 percent to 3,831 yuan per ton, 107 yuan lower than Wednesday's. Rebar is used in buildings to strengthen concrete, which accounts for around a quarter of China's steel products.
Rebar prices at the Shanghai Futures Exchange have been dropping in September, losing 363 yuan per ton since the start of the month.
Over the first eight months, fixed-asset investment in steelmakers shrank 10.8 percent year on year to 240 billion yuan, according to the National Bureau of Statistics.
The drop in FAI was due to the government's call to ease steel prices and cut overcapacity.
Meanwhile, investors are becoming warier as the domestic inventory of steel rebounded to 8.2 million tons yesterday following a production rise last month, according to Lange Steel Information Center, a steel industry consultancy.
China produced 74.6 million tons of crude steel in August, up 8.7 percent from a year ago, the statistics bureau said.
Domestic steelmakers were motivated to accelerate production lured by growing profit, said Wang Guoqing, research director at Lange.
Demand for steel, however, didn't sustain the momentum as investment in domestic infrastructure projects grew 18.6 percent over the first eight months, down 0.8 percentage points from the January-July period.
"The turning point for steel prices dropping seems to have started this month in the futures market," said Han Xiaoqin, analyst at Lange, adding that it is "hard to say how long the trend will last as the government's efforts to upgrade the industry would boost prices."