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Baoshan hikes product prices

BAOSHAN Iron and Steel Co has raised August prices for major products by up to 14 percent from July's rates amid recovering demand from auto makers and the construction sector.

China's top listed steel maker lifted prices for hot-rolled products by between 350 yuan (US$51.22) and 500 yuan and raised cold-rolled steel coil prices by 500 yuan, following price increases for July, according to Umetal and other industry data providers today.

The Shanghai-based company doesn't publicly announce price changes.

Major steel mills have been lifting prices in recent months to take advantage of recovering demand, spurred by a government stimulus package.

Analysts said the Baosteel hikes have exceeded market expectations as they outpace market price gains.

"Traders and users may reduce orders as the prices are more than they can afford," Umetal analyst Hu Yanping said. "But we also understand Baosteel's price increase because the mill did see a good order book in recent months, especially from auto clients."

China's passenger-vehicle sales gained 48 percent in June, the biggest jump since February 2006. Baosteel takes up more than half of China's auto sheet market.

The price hike also came at a time China is asking for deeper cuts for term iron ore prices from global miners after Japanese mills accepted a 33 percent reduction. Some market participants say the Baosteel price change may indicate China is ready to accept the prices that the Japanese counterparts have signed for steel making raw materials.

Some mills have previously held back price increases to prevent any negative influences on the drawn-out ore price negotiations, which passed a key deadline at the end of June.

"Still, I think it's more about demand pick-up rather than cost issue," China Securities analyst Wang Zhe said of the Baosteel price adjustment.

Baosteel fell 1.49 percent to 7.96 yuan today.


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