(Updates with closing prices) BEIJING, Jan 11 (Reuters) - Chinese steel product futures dropped on Monday, with stainless steel plunging to its lower trading limit, as inventories piled up for a second consecutive week on easing seasonal demand, while a surge in domestic COVID-19 infections also weighed. As of Jan. 7, stockpiles of the industrial metals rose for a second week, up by 5% from the week earlier, data from Mysteel consultancy showed. Inventories for construction steel rebar jumped 5%. Meanwhile, mainland China has reported 103 new coronavirus cases for Jan. 10, the biggest daily increase in over five months. Top steelmaking province Hebei had 82 new cases, accounting for 96% of total confirmed local infections, stoking concerns on steel mills’ production and logistics. Steel rebar on the Shanghai Futures Exchange, for May delivery, ended down 2.8% to 4,348 yuan ($671.56) per tonne. Hot-rolled coil slumped 4.2% to 4,458 yuan a tonne. Stainless steel on the Shanghai bourse, for March delivery, ended down 5% to 13,930 yuan per tonne. Prices for steelmaking ingredient also declined. The most-traded iron ore futures on the Dalian Commodity Exchange slipped 1.7% to 1,046 yuan a tonne and coke dropped 3.8% to 2,844 yuan. Capacity utilisation rates at 163 blast furnaces across China fell to 83.3% last week, the lowest level since April 10, 2019, according to Mysteel. Coking coal gained 1.0% to 1,782 yuan a tonne. * Spot prices for iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62, compiled by SteelHome consultancy, rose by $1 to $172.5 per tonne on Friday. * China’s factory gate prices fell last month at their slowest pace since February, official data showed on Monday, suggesting China’s manufacturing sector continues to see a steady recovery from the COVID-19 shock. ($1 = 6.4745 Chinese yuan renminbi) (Reporting by Min Zhang and Shivani Singh; Editing by Sherry Jacob-Phillips and Shailesh Kuber)