* Shanghai stainless steel hits its highest in more than two months
* Nickel steel feedstock exceeds $ 18,000 / T on LME
* Iron ore sweaters on China steel mills resetting demand
MANILA, Jan 7 (Reuters) – Stainless steel futures jumped 5% on Thursday as the metal used in automobiles and cookware expanded benefits driven by the higher cost of nickel feedstock and tight supply.
The most active stainless steel contract in March on the Shanghai Futures Exchange rose to 14,725 Yuan ($ 2,280.72) a tonne in morning trading, an uptrend of the day and the highest level since the end of October.
The smelting cost of nickel pig iron, the stock for stainless steel, remains high as many Chinese smelters use nickel concentrates at a high price they recently purchased, according to a Mysteel advisory report citing a market source.
Nickel prices continued to rise, with the London Metal Exchange benchmark exceeding the $ 18,000 per tonne rate for the first time since September 2019, as extended unrest in New Caledonia, the fourth producer world’s largest metal, supply disruption.
Declining nickel investments in warehouses analyzed by the Shanghai exchange, which fell more than half in 2020, have also added to the pressure of rising prices.
“The domestic spot price continues to strengthen, and there is still support below the nickel price,” analysts at Huatai Futures said in a note.
“The price of stainless steel futures may be strong at the moment, with the short supply in the spot market providing additional support, they said.
Iron ore prices also rose, driven by a resurgence in demand from Chinese steel mills, with the most active May contract on the Dalian Commodity Trade climbing 2.5% to 1,056.50 yuan per tonne.
Iron ore on the Singapore Exchange gained 0.3% to $ 165.48 per tonne.
Spot iron ore for delivery to the leading steel producer in China SH-CCN-IRNOR62 it stood at $ 168 per tonne Wednesday, according to SteelHome consulting.
Construction steel rubber on the Shanghai Futures Exchange advanced 1.2%, while hot-rolled coil jumped 2.8%.
Dalian cooking coal added 0.6% but coke slipped 0.2%. (Reporting by Enrico Dela Cruz; Editing by Shailesh Kuber)