January 22, 2013 / 3:22 AM / 5 years ago

UPDATE 1-China's Baosteel hikes steel product prices for March

* Raises main product prices by 200 yuan/T

* The third monthly increase in a row for this year

* Other mills could follow with bigger price increases - analyst (Adds comment, background)

By Ruby Lian and Fayen Wong

SHANGHAI, Jan 22 (Reuters) - China’s Baoshan Iron & Steel (Baosteel), the country’s biggest steelmaker by market value, said on Tuesday it has raised March booking prices for its main steel products, a move suggesting it sees a firmer outlook for steel demand in the first quarter.

It would be the third straight month for 2013 that Baosteel has now raised prices. Steel demand in China is set to improve after the Lunar New Year holidays in mid-February as construction and manufacturing plants restart making orders, along with a reviving economy.

Baosteel’s pricing decisions usually set the tone for the rest of the market. The company will raise both hot-rolled coil and cold-rolled coil prices by 200 yuan ($32.15) a tonne, the company said on its website.

“As far as I know, Baosteel has received rising orders from their customers in recent months, suggesting demand is recovering, and I expect other steel mills such as Wuhan Steel and Angang will follow with even bigger increases,” said Du Hui, an analyst with Qilu Securities in Shanghai.

Steel demand in the world’s largest steel producer typically declines before the new year holiday as construction activities slow during the cold weather season, hitting consumption of rebars and wire rods.

The construction sector, one of the largest steel consumers, is set to see a pick-up from late February, amid warmer weather.

Evidence of a burgeoning recovery in exports, stronger than expected industrial output and retail sales, together with robust fixed asset investment, all indicated that Beijing’s pro-growth policy mix has gained sufficient traction to underpin a revival without yet igniting inflationary risks.

Shares of Baosteel, which has a market value of nearly $14 billion, were down 0.2 percent in Tuesday morning trade, in line with the broader market.

$1 = 6.2213 Chinese yuan Editing by Paul Tait and Muralikumar Anantharaman

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