China's Baoshan Iron and Steel Co Ltd (Baosteel) has raised August prices for its major products by 9 to 13 percent versus the July tags, higher than market expectations, trade sources said on Monday.
Baosteel, the listed unit of China's largest steelmaker, has raised the price of straight-carbon hot-rolled steel coil by 350 yuan ($51.23) per tonne, while increasing the price of low-carbon hot-rolled steel coil by 500 yuan a tonne.
The company also raised the price of cold-rolled steel coil by 500 yuan a tonne, trade sources said, adding that they were surprised by the price hikes.
"I think it could mean that Baosteel has agreed to follow the price cut that Rio Tinto and Japanese steel mills signed." said Cui Jingyi, analyst at Guotai & Junan Securities.
"Previously some some steel mills held back the price hikes to prevent any negative influences on the iron ore price negotiation, and now the picture is clear for them to make their price adjustments," she said.
"Additionally, we have seen some recovery on domestic demand and exports, which offered enough excuse to the steelmakers to raise their prices," she added.
Steel prices in China have awaited cues from iron ore price negotiation with global major miners, with China seeking to pay less for imported iron ore this year than other countries.
The China Iron and Steel Association wants Rio Tinto (RIO.AX)(RIO.L), BHP Billiton (BHP.AX)(BLT.L) and Vale (VALE5.SA), the companies that control most of the global iron ore trade, to cut prices back to 2007 levels, which would mean a deeper cut in 2009 prices than many other steel mills have accepted.