China - 2009 July 8

Wuhan Iron & Steel Co., China’s third-biggest steelmaker, raised prices by as much as 12 percent for August delivery, signaling the government’s stimulus spending is improving demand from automakers and builders. Cold-rolled prices were increased by 480 yuan ($70) a metric ton, and hot-rolled coil by 240 yuan, Board Secretary Wan Yi said today in an interview. This would be the third month the Hubei province-based mill has raised prices for cold-rolled products, Umetal Research Institute said. Benchmark Chinese steel prices have gained 15 percent since April 1 as Wuhan Steel, Baoshan Iron & Steel Co. and Maanshan Iron & Steel Co. took advantage of recovering demand. The improvement may make it harder for Chinese mills to ask Rio Tinto Group to cut iron ore prices by more than 33 percent. “Economic statistics show steel demand is gradually picking up,” Hu Yanping, a Beijing-based analyst with Umetal, said by phone. “China may find it difficult to achieve its demand in contract iron ore price talks.” Wuhan Steel rose 2.7 percent to 8.82 yuan in Shanghai trading, compared with a 1.1 percent decline in the benchmark Shanghai Composite Index. The stock is up 85 percent this year. The price increases translate into a 12 percent hike to 4,450 yuan, excluding tax, for cold-rolled products, Umetal said. Hot-rolled prices would increase by 6.9 percent to 3,740 yuan, it said. Wuhan Steel’s Wan didn’t give details. Public Works Spending on public works and infrastructure projects by countries including China is lifting steel demand globally. Chinese steelmakers are locked in talks to settle annual contract iron ore prices with London-based Rio, the world’s second-largest supplier of the steelmaking ingredient. The mills may consider trimming their price cut demands of as much as 45 percent, Hebei Iron & Steel Group Vice President Tian Zhiping said July 2. Rio agreed to a 33 percent cut with Japanese and Korean customers.