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We like to compare the price of Brent Crude oil to Chinese steel rebar. Since the beginnning of 2012, there’s just been a massive drop in the price of both rebar and oil. And while oil got a legitimate bounce off the $90 level in June, rebar continued to head lower. Recently, there’s been a bounce in both rebar and Brent Crude, but we think it’s irrelevant as infrastructure spending is still on the decline. China isn't going to go on a building spree anytime soon.

Correlation does not equal causation, though this chart argues for Brent in the $70-80/bbl range. Something to think about. Rebar will have to climb higher and oil will have to head lower in order for these two to correlate closely again.

Chinese Rebar Decline Continues  - rebar