BEIJING: Chinese stainless steel futures surged more than 6% to an all-time high on Friday propped up by strong consumption and raw material supply crunch, while concerns over output cut in the steel sector also supported prices.
The most-traded stainless steel on the Shanghai Futures Exchange, for August delivery, jumped as much as 6.7% to 19,175 yuan ($2,965.15) per tonne during the session. The contract closed up 4.3% at 18,740 yuan.
“Downstream consumption (for stainless steel) is relatively good, both supply and demand are robust,” Huatai Futures wrote in a note, adding that the recent concerns over steel production cut also weighed on supply outlook.
Meanwhile, the environmental controls in China to restrict high-energy consuming and high-emission projects have resulted in a shortage of ferroalloys such as stainless steelmaking ingredient ferrochrome.
Other steel products on the Shanghai bourse were mixed, with construction rebar, for October delivery, up 0.2% at 5,559 yuan a tonne while hot rolled coils edging 0.1% lower to 5,952 yuan per tonne.
Weekly apparent consumption for five main steel products rose 3.9% to 10.77 million tonnes as of July 15 from a week earlier, data from Mysteel consultancy showed, as steel inventories fell for the first time in six weeks.
Prices for other raw materials on the Dalian Commodity Exchange gained.
Benchmark iron ore futures, for September delivery, rose 1.9% to 1,241 yuan a tonne at close.
Coking coal futures increased 2.4% to 2,053 yuan per tonne and coke rose 3.1% to 2,693 yuan a tonne.
Spot prices of iron ore with 62% iron content for delivery to China rose $1 to $221.5 per tonne on Thursday, according to SteelHome consultancy.