China steel giant rolls out price hike

China is the world's biggest steel consumer and importer of iron ore. Above, a steel factory in Dalian, China. China Daily / Reuters

Baoshan Iron & Steel will raise prices for its main products for February, it said yesterday.

The move comes as China's biggest listed steel maker tries to recoup the costs of raw material iron ore, which have jumped to 15-month highs amid signs economic growth is picking up.

China is the world's biggest steel consumer and importer of iron ore. Vigorous restocking by its steel mills in anticipation of higher demand for their products has pushed global iron ore prices to above US$150 a tonne, their highest since October 2011.

Data last week showed manufacturing activity in the world's second-biggest economy was at its strongest since May 2011.

"The big rally in imported iron ore prices brings rising pressure for steel mills, so they have to transfer the production cost," said Hu Yanping, an analyst with the industry consultancy Custeel.com in Beijing. Expectations of an improvement in steel demand in March and April, when manufacturing activity is due to return to full swing after slowing down for winter and the Lunar New Year, has also prompted mills to push up steel prices, she added.

Baosteel is the industry trend-setter and the price rise for its main products, the third consecutive monthly increase, is likely to be followed by other steel producers.

The company said it would raise hot-rolled coil prices, mainly used in manufacturing, by $25.68 a tonne in February to a six-month high, while cold-rolled coil prices for car manufacturing will rise by 120 yuan a tonne.

China steel rebar futures rose to more than $640 a tonne yesterday, the highest in more than six months.

* Reuters