BEIJING/NINGBO: Stainless steel futures on China's Shanghai Futures Exchange (ShFE) jumped nearly 3% on Thursday, fuelled by speculative trading as prices of the industrial metal flipped into backwardation.
The most-traded November contract of stainless steel gained as much as 2.9% to 14,345 yuan ($2,104.36) per tonne in early trade. It closed up 2.3% at 14,260 yuan per tonne.
Backwardation is a situation in which the spot or cash price of a commodity is higher than the forward price.
"Steel mills are propping up prices on high costs, but consumption is not very good," said an analyst who declined to be named, explaining why futures prices dropped faster than spot prices. Other steel futures on the ShFE also gained.
Construction rebar, for January delivery, rose 0.6% to 3,552 yuan a tonne.
Hot-rolled coils, used in the manufacturing sector, increased 0.5% to 3,674 yuan a tonne.
Benchmark iron ore futures on the Dalian Futures Exchange edged 0.3% higher to 767 yuan per tonne.
Both Dalian coking coal and coke futures declined 1.2%.
Spot prices of iron ore with 62% iron content fell for the fifth straight session to $118.5 per tonne on Wednesday, according to data from SteelHome consultancy.
China's foreign exchange regulator granted fresh quotas under its outbound Qualified Domestic Institutional Investor (QDII) scheme for the first time since April 2019, official data showed.
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