Chinese futures ended the week in positive despite mixed market outlook regarding the softening steel demand.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for September delivery, rose slightly by RMB 5.00 or 0.67% day-on-day at RMB 746.50 per tonne on Friday.
The steel rebar contract on the Shanghai Futures Exchange also gained slightly by RMB 50 or 1.40% at RMB 3,619 per tonne.
Falling rebar margins
According to Metal bulletin, the monthly rebar margins is expected to average at RMB 103.16/mt for July, down over half of the average margins recorded at RMB 218.67/mt in June.
The low rebar margins was due to the rainy season that affected construction activities in southern China, which resulted the Chinese mills to stock up high level of rebar inventory at 7.97 million mt as of July 2, up 3.8% week-on-week.
However, some trade sources expect some iron ore price supports from tightening supply of Australian ores as Australian ports normally undergo scheduled maintenance in July after the close of Australia financial year-end.
Rising finished steel stocks
Another market concern rested on the rising Chinse mills’ steel stocks that increased by 4.1% week-on-week to 6.5 million mt for the June 25-July 1 period, based on Mysteel’s data.
So far, the steel stocks had risen for the fourth consecutive weeks which was 40% higher than previous year.
This suggested a slowdown in steel consumptions among end-users due to the typical rainy season that affected steel demand.