Baosteel forced to lift prices in February

Baoshan Iron and Steel Co, China's largest listed steel company, will raise February prices for main products because of higher raw material prices and rising demand.

The Shanghai-based mill will raise hot-rolled steel product prices by 160 yuan (US$25.7) a ton and cold-rolled steel product prices by 120 yuan a ton, according to a statement yesterday. The company's monthly pricing policy usually sets the tone for the rest of the domestic industry.

This is the third consecutive month for Baosteel to raise prices and the latest increase was bigger than the previous two hikes.

Jiangsu Shagang Co, China's leading private steel mill, also raised prices of reinforced steel bar, used in construction, by 150 yuan a ton.

Prices of iron ore, the key steelmaking ingredient, rose 30 percent in December as steelmakers boosted stockpiles and overseas miners cut supplies during the holiday season. Higher ore prices also came amid hopes of rising demand as China accelerated approval for major infrastructure projects to bolster economic growth.

Steel prices gained only 6 percent in December, so mills need to raise prices to counter the higher ore costs, UBS analysts Janet Sun and Hubert Tang wrote in a note yesterday.