Steel prices in China should be decided by the market, with no government interventions, Xiong Bilin, Industrial Department deputy director of the National Development and Reform Commission (NDRC), said on Thursday.

Xiong said these were his own personal opinions while commenting on Baosteel Group's delayed release of its price adjustments in the coming quarter, which had been scheduled for May 20.

Surging prices of imported iron ore would push up the costs of domestic steelmakers by 400 to 600 yuan (57 U.S. dollars) per tonne, said Xiong.

The overall cost would rise by about 1,000 yuan per tonne, taking into account increased coke prices, shipment and energy charges, said Xiong.

The steelmakers might want to pass on the cost rises to downstream enterprises, depending on what downstream players could afford, he said.

"Among them, the electric appliance manufacturers could be weaker in taking on upstream price increases. The high steel prices will go down if they were unacceptable to downstream companies," said Xiong.

Baosteel Group might also be contemplating the affects of the 8.0-magnitude earthquake that hit southwest China last week, said Hu Yanping, an analyst with Umetal.com. Reconstruction work would require large amounts of steel.

But given the high domestic prices already pressing upon downstream companies, market concern is that the government might raise export taxes to guarantee domestic supply, Hu said.

(Xinhua News Agency May 23, 2008)