Iron ore futures started the week on gains, as market participants held their concerns over supply tightness and low port inventory.
The futures of Dalian Commodity Exchange (DCE) for September delivery then went up by 2.09% day-on-day or RMB 24.50 to RMB 1,196/mt during the day trading session on Monday.
The rebar futures also rose slightly by 0.98% on-day or up RMB 49 to RMB 5,070/mt, during the day trading session.
Supply tightness among port stocks
Most Chinese mills still relied on mainstream fines with high ferrous content like BRBF, PBF, Newman fines and MAC fines, which were tight among port stocks.
According to Steelhome, the iron ore port inventory had declined for the fourth consecutive week to 123.95 million mt, an eight-month low among the Chinese ports as of Jun 25.
However, some trade sources believed the supply tightness of PBF to ease soon, after the completion of scheduled maintenance of Rio Tinto’s ports by month-ends.
Lower rebar output and falling rebar prices expected
Mysteel expected prices of rebar and wire rod to decline during Jun 28- Jul 2, due to thin margins and rising rebar stocks among commercial warehouses, totaling 11 million mt as of Jun 24, up 1.3% on-week.
The high rebar stocks were met with falling rebar production as output dropped slightly by 0.7% on-week to 3.77 million mt over the Jun 17-23 period, according to Mysteel.
The lower rebar production indicated lower steel demand, while the Tangshan billet prices stabilized at RMB 4,860 on Monday, after a gain of RMB 20 over the weekend.