China’s steel prices spike on record raw material costs, raising inflation fears

2021-05-12 13:35:32

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.

Commodity prices are above pre-pandemic levels in China, with the cost of iron ore, one of the main ingredients used to make steel, hitting a record high of US$200 per tonne last week.

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.