By Enrico Dela
JANUARY 7, 202112:31 PMUPDATED
* Shanghai stainless steel hits highest in over two months
* Stainless steel feedstock nickel crosses $18,000/T on LME
* Iron ore jumps on China steel mills’ restocking demand
MANILA, Jan 7 (Reuters) – China’s stainless steel futures leapt 5% on Thursday as the metal used in vehicles and cookware extended gains driven by higher cost of feedstock nickel and tight supply.
The most-active March stainless steel contract on the Shanghai Futures Exchange rose to 14,725 yuan ($2,280.72) a tonne in morning trade, the day’s upside limit and the highest since late October.
The smelting cost of nickel pig iron, the feedstock for stainless steel, remains high because many Chinese smelters are using high-priced nickel concentrate they bought recently, according to a Mysteel consultancy report citing a market source.
Prices of nickel continued to rise, with the London Metal Exchange benchmark crossing the $18,000 a tonne level for the first time since September 2019, as extended riots in New Caledonia, the world’s fourth-largest producer of the metal, fuelled supply worries.
Shrinking nickel inventories in warehouses monitored by the Shanghai exchange, which fell by more than half in 2020, have also added to the upward pressure on prices.
“The domestic spot premium continues to strengthen, and there is still support under the nickel price,” Huatai Futures analysts said in a note.
“The stainless steel futures price may remain strong for the time being”, with the short supply in the spot market providing extra support, they said.
Iron ore prices also rose, propelled by restocking demand from Chinese steel mills, with the most-active May contract on the Dalian Commodity Exchange climbing 2.5% to 1,056.50 yuan a tonne.
Iron ore on the Singapore Exchange gained 0.3% to $165.48 a tonne.
Spot iron ore for delivery to top steel producer China SH-CCN-IRNOR62 steadied at $168 a tonne on Wednesday, according to SteelHome consultancy.
Construction steel rebar on the Shanghai Futures Exchange advanced 1.2%, while hot-rolled coil jumped 2.8%.
Dalian coking coal added 0.6% but coke slipped 0.2%. (Reporting by Enrico Dela Cruz; Editing by Shailesh Kuber)
Post time: Mar-29-2021