China’s steel prices spike on record raw material costs, raising inflation fears
- Nearly 100 Chinese steelmakers adjusted their prices upwards on Monday amid record costs for raw materials like iron ore
- Although the effect on overall inflation is not yet clear, the spike in steel prices could threaten a range of downstream industries
The decision by Chinese steel mills to fire up prices amid soaring raw material costs has raised concern about inflation risks in the world’s second largest economy and the impact this may have on smaller manufacturers who cannot pass on higher costs.
That prompted nearly 100 steelmakers, including leading producers such as Hebei Iron & Steel Group and Shandong Iron & Steel Group, to adjust their prices on Monday, according to information posted on industry website Mysteel.
Baosteel, the listed unit of China’s largest steelmaker Baowu Steel Group, said it would raise its June delivery product by up to 1,000 yuan (US$155), or more than 10 per cent.
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Steel prices have been climbing since February. Prices rose 6.3 per cent in April after gains of 6.9 per cent in March and 7.6 per cent the previous month, according to the South China Morning Post’s calculations based on China’s domestic steel price index, which is published by the Steel Home consultancy.
As of last Friday, steel prices were up 29 per cent for the year to date.