The rusted iron bar is an unused item related to the 2019 Easter event. It appears that it was going to be obtained at some point during the Crafting guild portion of the quest, from which one would obtain the oxidised iron dust. However this appears to have been changed shortly before release, as the Crafting Guild Apprentice simply hands over the dust with no involvement of a bar, yet the rusted bar remains in the game cache.
This information has been compiled as part of the update history project. Some updates may not be included—see here for how to help out!