* China to introduce policies to boost domestic spending
* Tangshan orders mills to cut sintering output - reports
* Sino-U.S. trade talks continue on Wednesday
BEIJING, Jan 9 (Reuters) - Prices of steel and its raw materials rose in China on Wednesday, buoyed by Beijing’s vows to introduce policies to strengthen consumption and hopes that Sino-U.S. trade talks will end a months-long dispute.
A senior official at China’s top state planner said the country plans to introduce policies to boost domestic spending on items such as autos and home appliances this year as part of wider efforts to strengthen consumption in China.
A variety of steel products, especially hot-rolled coil and cold-rolled coil, are widely used to make autos and household items.
“The main focus of fundamentals in the steel market is now on the demand side,” said a Shanghai-based steel trader.
“Some mills have already hiked prices for February and March delivery as they expect to see stronger demand after Chinese new year in February,” he said.
The listed unit of China’s largest steel firm, China Baowu Group, said on Sunday it would raise hot-rolled coil and cold-rolled steel coil prices for March delivery by 50 yuan ($7.31) a tonne.
The most-active hot-rolled coil contract on the Shanghai Futures Exchange climbed 0.5 percent to 3,417 yuan a tonne as of 0145 GMT.
Benchmark Shanghai rebar futures also rose, gaining 0.5 percent to 3,520 yuan a tonne.
On Tuesday, some Chinese industrial websites reported that the top steelmaking city of Tangshan has issued a smog alert, effective from Jan. 8 to Jan. 14, asking steel mills to cut sintering output by 30 percent to 60 percent, or shut completely depending on emission levels.
The Tangshan government declined to comment but said in a statement that it expects to see air quality worsen during Jan. 10-12.
“But investors are still cautious ... they are waiting for progress in Sino-U.S. trade talks,” said the Shanghai trader.
The United States and China will continue trade talks in Beijing for an unscheduled third day amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to Chinese markets.
The most-traded iron ore futures on the Dalian Commodity Exchange extended gains to a fifth straight session and hit a 10-week high at 517 yuan a tonne in early trade.
The Dalian coking coal contract for May delivery gained 0.3 percent to 1,190 yuan a tonne, while coke futures rose 0.6 percent to 1,964 yuan.
$1 = 6.8373 Chinese yuan renminbi Reporting by Muyu Xu and Dominique Patton