China stainless steel futures jump on raw material costs, firm demand

Shanghai stainless steel futures hit a six-week high on Friday, rising as much as 3% at one point, propped up by resilient raw material prices and optimism over domestic demand.

The most active contract for stainless steel on the Shanghai Futures Exchange, for September delivery touched 13,470 yuan ($1,906.72) a tonne, the highest since May 22, and was up 2.2% at 13,365 yuan per tonne as of 0330 GMT.

“Stainless steel prices are being supported by firm raw material prices and macro market sentiment,” said a Shanxi-based trader, referring to nickel and chrome ore.

Nickel prices rose 2.4% on Friday, and are on track to close the week up nearly 3%.

Some stainless steel producers have raised prices recently, the trader said, adding that Shanxi Taigang Stainless Steel lifted their 304 hot-rolled stainless steel prices by 200 yuan per tonne this week.

“Stainless steel output has been robust but inventories are not piling up. The only explanation is domestic demand is really strong “ said Ellie Wang, an analyst with CRU Group in Shanghai, adding that consumption is mainly driven by the infrastructure sector.

Other steel futures prices also gained. Shanghai construction steel rebar, for October delivery, rose 1.1% to 3,607 yuan a tonne.

Hot-rolled coil, used in cars and home appliances, increased 1.0% to 3,600 yuan per tonne after the auto industry body predicted auto sales to rise 11% year-on-year in June.
FUNDAMENTALS

* Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, edged up 0.3% to 744 yuan a tonne.

* Spot prices for iron ore with 62% iron content for delivery to China was unchanged to $101.5 per tonne on Thursday.

* Dalian coking coal gained 0.7% and coke inched up 0.1%.

* Inventories of five main steel products in China, both at mills and held by traders, rose by 3.4% to 21.23 million tonnes as of July 2 compared with a week earlier, according to Mysteel consultancy.
Source: Reuters (Reporting by Min Zhang and Tom Daly; editing by Richard Pullin)