Stainless steel soars 5% on higher raw material costs


    Stainless steel futures leapt 5 percent 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 ton 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 highpriced 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 CMNI3 crossing the $18,000 a ton 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 mostactive May contract on the Dalian Commodity Exchange climbing 2.5 percent to 1,056.50 yuan a ton.

    Iron ore on the Singapore Exchange gained 0.3 percent to $165.48 a ton.

    Spot iron ore for delivery to top steel producer China steadied at $168 a ton on Wednesday, according to SteelHome consultancy.

    Construction steel rebar on the Shanghai Futures Exchange advanced 1.2 percent, while hotrolled coil jumped 2.8 percent.

    Dalian coking coal added 0.6 percent but coke slipped 0.2 percent.