(Yicai Global) June 25 -- Domestic steel inventory has picked up this month, which could prove bad news for metal prices, an insider told Yicai Global.

Prices have already been creeping up since the start of June, with the average price of grade 3 rebars with a 25-milimeter diameter jumping to CNY4,168 (USD637) a ton on June 22, from CNY4,061 on at the end of May, according to data from Lange Steel Cloud Business Platform. China's steel stocks had been depleting for 14 straight weeks, but have begun to pick up as production rises before July, which is traditionally a low-output season.

Crude steel production was at its highest so far this year in early June, and could surge even more next month after blast furnaces return to operation following stoppages for maintenance, the data shows.

"The steel market is projected to be dominated by turbulent prices in July," said Qiao Zhongmin, general manager of Beijing Auspicious Year Trading. "But it is very likely tied up capital will form a downward see-saw in the second half of the year."

Another steel trader thinks prices will remain relatively stable around CNY4,000 a ton. His firm's sales volume has not hit the same levels as this time last year, but the trader puts that down to there being fewer bullish reports on the market. Demand is also shrinking, he added, saying a number of major projects in Beijing are nearing completion.