Stainless steel futures in China dropped 6% on Thursday to hit their daily trading limit, as a slide in nickel rates weighed on prices.

Nickel prices on the Shanghai Futures Exchange also declined 6% in early trade on supply glut concerns after Tsingshan claimed stable supply for nickel matte.

“Stainless steel prices are dented by sentiment of the nickel market,” analysts with Huatai Futures said in a note. “But, the nickel matte news can benefit stainless steel in the mid term.”

The most-traded stainless steel contract on the Shanghai bourse, for May delivery, fell to 13,990 yuan ($2,162.09) per tonne as of 0330 GMT.

However, analysts at Huatai Futures also said supply and demand for stainless steel in the first half of 2021 wasn’t weak and prices could rebound after the sentiment-driven disruption.

Other steel futures on the Shanghai exchange were range-bound.

Steel rebar dipped 0.2% to 4,834 yuan a tonne and hot-rolled coil inched 0.1% lower to 5,012 yuan.

FUNDAMENTALS

* Benchmark iron ore futures on the Dalian Commodity Exchange rose 2.0% to 1,175 yuan a tonne.

* Spot prices of iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 gained by $2 to $176.5 per tonne on Wednesday, data from SteelHome showed.

* Dalian coking coal edged down 0.1% to 1,499 yuan a tonne.

* Coke futures dropped 2.8% to 2,461 yuan per tonne.

* China’s coal consumption is expected to continue rising in 2021 despite Beijing’s pledges to boost the use of clean energy and curb greenhouse gas emissions, the China National Coal Association said on Wednesday.

Source: Reuters (Reporting by Min Zhang and Shivani Singh; editing by Uttaresh.V)