Baosteel likely raise steel product prices of around 9 – 13 percent next month. According to analyst at Guotai & Junan Securities, Cui Jingyi, the decision Baosteel raised steel product prices due to Baosteel agree iron ore price discount that is agreed ole Rio Tinto and Japanese steel mills.

As is known in May, and Rio Tinto companies of Japan and Korea have agreed sale price cut annual iron ore 33%. However, discounts of iron ore between Rio Tinto and steel company of Japan, the association rejected by the steel company China. Association of the company want the discounted price of steel iron ore more than 33%. Chinese steel companies association want the discount price 40-50 per cent iron ore. The lack of certainty of discounts given by the ore mining companies iron ore to make steel the company has not been making decisions about the price of standard steel products.

Following conditions of production of steel and steel product price fluctuations which is issued by the steel company, Baosteel.

August Baosteel’s price increase will be the third monthly increase in a row, they take the highest price since November, when the scale of the global collapse is a clear demand.

It is straight-up price of carbon hot-rolled steel coil by 350 yuan ($ 51.23) per ton, while the increase in the price of a low-carbon hot-rolled steel coil by 500 yuan a ton.

The company also raised the price of steel cold-rolled coil by 500 yuan a ton, trade sources said, adding that they were surprised by the price hikes.

Some analysts said Baosteel’s sharp price hikes that is supported by the recovery in demand and export, but others said the price was driven by speculation, doubts the impact of real demand.

China’s crude steel output reached 45.39 million tons in June, data from the China Iron and Steel Association show, equivalent to the annual production of 552.2 million tons, more than 10 percent above the 2008 output of 500 million tons.

Increasing production is reflected in increased earnings between Chinese steel factory, stating that they will start in May after the seven days straight in the red.

“But I do not think demand has increased a lot. As far as I know a lot of orders come from the traders, not directly from users,” said a trader in one of the big iron ore miners, who requested to remain anonymous because he was not authorized to speak with the media.

“Many traders build stockpiles now, because the first wave of inflation and other price of steel increased rapidly in the rest of the year,” said a trader.

Prices in China have fallen in the consumer and producer for several months, but borrowing spree in China and the global liquidity excessive intensification some concerns that inflation may return.

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