Steel prices jump with iron ore up

Domestic steel producers have started to increase their product prices across the board as 2013 gets underway, in response to rising material costs, analysts told the Global Times Monday after Baoshan Iron & Steel Co (Baosteel) announced a price hike.

Shanghai-based Baosteel said Monday it would raise prices on all products in February by amounts ranging from 80 yuan ($12.80) per ton to 160 yuan per ton before taxes.

Industry counterparts also scheduled price increases Monday.

Data from steel information portal mysteel.net indicated that on Monday Anyang Iron & Steel Group Co in Central China's Henan Province raised product prices by 50 yuan per ton (including tax), and Shandong Iron & Steel Group Co in East China's Shandong Province raised prices by 100 yuan per ton (including tax).

Mysteel.net chief analyst Jia Liangqun attributed the industry-wide price hike to the inflation of steelmakers' main raw material—iron ore, which is seriously undersupplied in the current Chinese market.

Domestic iron ore mines tend to be small in scale and were vulnerable to the strong deflation of iron ore in September 2012, resulting in 40 percent of them shutting down temporarily and an inventory decline around the country, Jia told the Global Times Monday.

According to the China Iron and Steel Association, domestically produced iron ore hit 2012's lowest price of 816.66 yuan per ton in September, rebounding to 890.28 yuan at the end of December.

Besides, China's steel firms prefer to use more expensive imported iron ore, given that domestically produced iron ore has a lower iron content, Jia noted, adding that the current price of imported iron ore is more than $150 per ton.