Baoshan Iron & Steel Co, China's largest steelmaker, said yesterday it would raise steel product prices from the first quarter of 2008 because of rising demand and raw material costs.

According to the company's statement released yesterday, prices of benchmark hot-rolled products will be raised by as much as 300 yuan per metric ton, and that for cold-rolled steel products would increase by 200 yuan per ton. Prices of thick steel plates would rise by 500 yuan per ton.

"The big price adjustment is beyond our expectations," said China International Capital Corp. After the adjustment, prices of hot-rolled and cold-rolled steel would jump 8 percent and 6.5 percent respectively.

"Baosteel's prices are usually higher than other domestic steel manufacturers. The price rise is expected to push up the spot steel price," China International said.

Pretax hot-rolled prices in the market rose an average 5.3 percent from the end of September to November 16.

"The price of Baosteel's high-end steel products is to increase less than that of ordinary steel products because of the expected increase in output arising from previous investment in facilities," said Liu Baoyao, an analyst at Guangfa Securities.

Analysts said the rise of Baosteel's prices also shows the company's confidence in the Chinese steel market in the first quarter. "From past experience, the steel price rise will continue at least until May," said Liu.

"The price rise can cover the rising cost of raw materials, including iron ore and coal," Liu said, adding that iron ore prices for 2008 is set to rise because of the soaring marine transportation fee.

"Even if the rise of the iron ore price range is higher than expected, Baosteel can further raise the prices, and we continue to be positive about the outlook of China's steel market next year," said the statement.

Baosteel raised steel product prices in the second quarter this year and then cut prices in the fourth quarter.

(China Daily November 21, 2007)