July 3, 2020 / 7:27 AM / a month ago

UPDATE 1-China stainless steel futures jump on raw material costs, firm demand

* Stainless steel futures up as much as 3% in early trade

* HRC prices increase on expected rising auto sales

* Dalian iron ore prices inch up (Updates with closing prices)

BEIJING, July 3 (Reuters) - Shanghai stainless steel futures hit a six-week high on Friday, rising as much as 3% at one point, propped up by resilient raw material prices and optimism over domestic demand.

The most active contract for stainless steel on the Shanghai Futures Exchange, for September delivery touched 13,470 yuan ($1,906.72) a tonne, the highest since May 22, and was closed up 2.3% at 13,380 yuan per tonne.

“Stainless steel prices are being supported by firm raw material prices and macro market sentiment,” said a Shanxi-based trader, referring to nickel and chrome ore. Shanghai nickel price rose 3.3% on Friday.

Some stainless steel producers have raised prices recently, the trader said, adding that Shanxi Taigang Stainless Steel lifted their 304 hot-rolled stainless steel prices by 200 yuan per tonne this week.

“Stainless steel output has been robust but inventories are not piling up. The only explanation is domestic demand is really strong “ said Ellie Wang, an analyst with CRU Group in Shanghai, adding that consumption is mainly driven by the infrastructure sector.

Other steel futures prices also gained. Shanghai construction steel rebar, for October delivery, ended up 1.4% at 3,619 yuan per tonne.

Hot-rolled coil, used in cars and home appliances, increased 1.2% to 3,606 yuan per tonne after the auto industry body predicted auto sales to rise 11% year-on-year in June.

FUNDAMENTALS

* Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, rose 0.7% to 747 yuan per tonne.

* Spot prices for iron ore with 62% iron content for delivery to China was unchanged to $101.5 per tonne on Thursday.

* Dalian coking coal gained 0.5%, while coke inched down 0.03%.

* Inventories of five main steel products in China, both at mills and held by traders, rose by 3.4% to 21.23 million tonnes as of July 2 compared with a week earlier, according to Mysteel consultancy.

$1 = 7.0645 Chinese yuan Reporting by Min Zhang and Tom Daly; Editing by Richard Pullin and Sherry Jacob-Phillips

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