The largest steel maker in China,Baosteel, agreed with two of the world's major iron ore providers on price hikes for 2005, the company said Monday.

On behalf of Chinese steel makers, Shanghai-based Baosteel heldnegotiations with Hamersley of Australia and Companhia Vale do RioDoce (CVRD) of Brazil last week and agreed to raise ore prices 71.5-percent from those in 2004.

On Feb. 22, Nippon Steel reached an agreement with CVRD on the same price increase, after which Baosteel announced on its websitethat the price hike is "out of the range that steel industry can sustain, which definitely will bring negative impact to the long-term healthy development of global steel industry."

Analysts said Chinese steel manufacturers should try to gain more leverage by taking the advantage of its share in the purchaseof iron ore in the world market.

As a result of the price increase of iron ore, analysts expected that price hike of steel in China is inevitable. Major steel producers have raised their quoted price for the second quarter to ease the unexpected rise in costs.

Source: Xinhua