SHANGHAI, Jul 4 (SMM) – The recent high temperature and frequent rainfalls have caused a significant decline in demand for rebar. As a result, rebar inventories have begun to accumulate. However, rebar inventory is still low year-on-year, thus inventory pressure on steel mills is small. Driven by decent profits, pig iron production continued to increase. In addition, the market had strong expectations for stimulus policies, boosting ferrous metals prices. Thanks to limited supply increase and growing demand, iron ore futures prices led gains among ferrous metals. But spot iron ore prices failed to keep up. The spot prices of PB fines at ports in Shandong gained just 10 yuan/mt from the previous week.
Looking forward into this week, some steel mills have plans for blast furnace maintenance in July, thus pig iron production may plateau. Iron ore shipments from overseas mines increased significantly in late June, with further room to grow this week. Considering that an important government meeting will be held in July, which may introduce real estate and economic stimulus policies. This, coupled with low iron ore inventory, will provide strong support for iron ore prices. However, the production enthusiasm of steel mills may cool due to the off-season for terminal demand and profit erosion by rising ore prices. Imported iron ore prices are likely to move at highs this week.
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