June 29(LTIT) – China's Shanghai steel rebar futures rose on Thursday, moving away from a near four-week low as better-than-expected steel inventory data boosted sentiment despite concerns about weaker demand.

Weekly inventory data compiled by Steelsearcher.com, a Chinese e-commerce steel trading platform, showed a 2.4 percent decline in rebar stocks held by Chinese traders after a rise in stocks last week.

"The market feared that stockpiles will continue to grow this week, since that would be a clear signal of weak demand. Now stocks are down, which means the breaking point for demand has not come yet," said Sun Feng, senior analyst at Orient Futures.

However, he warned that Steelsearcher.com data did not cover traders country-wide.

"The overnight data may only temporarily lift market sentiment. People are still waiting to see the more representative figure from Mysteel consultancy," Sun said.

Last week's Mysteel data showed stocks of steel products rose by 110,000 tons to 10.1 million tons following 14 consecutive weeks of declines.

The most-active construction steel rebar futures on the Shanghai Futures Exchange rose 1.6 percent to 3,746 yuan ($566.58) a ton. Rebar had held around 3,663 yuan a ton for the previous two days, its lowest since May 31.

Spot steel prices dipped 0.2 percent to 4,311.91 yuan a ton on Wednesday.

"Demand for steel could become leaner in July when construction works typically halt due to a heatwave across the country," said Sun.

The China Meteorological Administration expects East China's Jiangsu and Anhui provinces as well as Central China's Henan and Hubei provinces to face heavy rains in the coming three days. The regions in North China's Hebei Province and Inner Mongolia Autonomous Region have issued high-temperature alerts.

Prices of steelmaking raw materials rose alongside steel.

The most-traded iron ore contract for September delivery added 0.7 percent to 466.5 yuan a ton. Dalian coking coal prices edged up 0.5 percent to 1,190.5 yuan a ton, while coke futures gained 0.8 percent to 2,052 yuan a ton.