Baoshan, Chinese Steelmakers Gain on Price Increase

Baoshan Iron & Steel Co. paced a rally by Chinese steelmakers in Shanghai trading as increases in product prices spurred optimism demand may recover.
Baoshan Iron, the country’s largest steelmaker, said it increased prices of cold-rolled products by 300 yuan ($44) a metric ton for March delivery, confirming an earlier report by researcher Umetal.com. That’s a gain of 8.7 percent, according to Bloomberg calculations. Hot-rolled coil prices were also raised by a similar amount, or a 7.8 percent boost.
The company’s stock added 1.7 percent to 5.35 yuan at the close, the highest since Dec. 11. The gain was more than twice the benchmark CSI 300 Index’s 0.6 percent rise today.
“The price hike reflects expectations for a pick up in demand after the Spring Festival,” wrote Guotai Junan Securities Co. analysts Cui Jingyi and Jiang Qiu in a note. They have a “neutral” rating on the steel industry.
The festival refers to the Lunar New Year holiday next week.
China’s State Council, or cabinet, banned steelmakers from expanding capacity between Jan. 20 and Dec. 31 this year and said last week it will encourage mergers and acquisitions in the industry as part of measures aimed at bolstering the industry.
China’s biggest mills posted combined losses in the fourth quarter as steel prices fell faster than raw material prices.
Hunan Valin Steel Co., part-owned by ArcelorMittal, climbed 6.8 percent to 5.63 yuan. Wuhan Iron & Steel Co., the fifth- largest Chinese steelmaker, added 3.5 percent to 6.24 yuan.