Major Chinese steel mills are set to raise product prices for September delivery amid a rebound in demand and will pass on higher costs to customers.

Baoshan Iron and Steel Co, China's largest, is expected to raise September prices for major hot-rolled and cold-rolled steel products by 200 to 300 yuan (US$29 to US$44) per ton, or 5 to 6 percent, from August levels, Reuters reported citing unidentified trade sources. Its move follows price increases for August and July.

Another major mill, Wuhan Iron and Steel Co, plans to raise prices for major products by 200 to 400 yuan per ton for September.

Although there is no confirmation for the price increase, the big mills are known to release such indicative pricing move before official notification to test market reaction.

Mills are benefiting from China's stimulus package which spurred demand from auto makers and builders, amid rising steel prices since mid-April.

Mysteel analyst Xu Xiangchun said this round of price increase was initially triggered by a recovery in demand but has recently been more related to price increases by big mills, indicating a correction may be inevitable.

China's major steel mills have posted an aggregate profit last month, for the second monthly gain, after seven straight months of losses due to the global slump.

The 71 big and mid-sized firms had combined profit of 3.55 billion yuan last month, the Ministry of Industry and Information Technology said.

(Shanghai Daily July 31, 2009)