SHANGHAI, Feb 10 (Reuters) - China's Baoshan Iron & Steel will raise its main steel product prices for March, it said on Friday, a move seen as tapping into improving steel demand.
Analysts expect a seasonal pick-up in steel demand to encourage steel mills in the world's largest steel producer to lift prices, but uncertainties in the marco-economy may stifle hopes of any big price spike in the domestic market.
"An increase in steel demand in March is expected, and steel mills are eager to lift prices after producing at marginal profits or making losses over the past few months," said Hu Zhengwu, analyst with Beijing-based industry consultancy Custeel.com.
The Shanghai-based firm will raise hot-rolled coil and cold-rolled coil prices by 150 yuan ($23.83) per tonne respectively, after the company kept prices flat for February.
Baosteel said earlier its 2011 unaudited net profit fell 43.4 percent, while another major mill Angang Steel made a net loss of around 2.2 billion yuan for the year due to rising raw materials costs.
"Traders and users have strong demand for restocking after the Lunar New Year holiday, and steel mills are also hoping to deliver more products to market to replenish capital," Hu added.
However, analysts warned that a crackdown in the property market and few signs tight liquidity may ease soon will continue to weigh on steel demand, limiting price gains.
"The seasonal recovery in steel demand will come later this year compared to the past, and I expect the market will continue to fluctuate but no big falls are on the cards," said Zhou Weijiang, an analyst with Galaxy Futures in Beijing.
China's annual inflation spiked to a consensus-busting 4.5 percent in January as spending jumped during the Lunar New Year holiday season, breaking a five-month softening trend and giving Beijing limited room to ease liquidity massively in the near term.
However, China's top planning agency, the National Development and Reform Commission (NDRC), said consumer inflation would resume an easing trend after January's rebound.
China's crude steel production has been running at low rates since November, with daily output standing at below 1.7 million tonnes, which could support the market in the near term.
"The spring season for the steel market will come sooner or later. But it's still too early to forecast any big increase in prices as Beijing's monetary policy trend remains unclear," Zhou added.
($1 = 6.2952 Chinese yuan)