China is the world's largest consumer of steel, consuming over 700 million tons in 2012. Total steel consumption in 2013 is expected to grow 3.1 percent year-on-year, up 0.6 percentage points compared with 2012's growth, data from the China Iron and Steel Association showed Monday.
"Boosted by recovering demand, steel prices will see a moderate increase in 2013. And the market will be optimistic, at least in the first half of 2013," Wang at Lange Steel noted.
Other than increasing orders, rising iron ore prices are also a major reason behind the price hike, experts said.
Prices of domestically produced iron ore have increased over 10 percent in the past two months, and prices of imported ore also increased by nearly 25 percent to around $144 per ton.
"Price speculation in imported iron ore is rampant. Each time domestic steel prices show a sign of increase, prices of imported iron ore surge," Wang noted.
Thus although steel prices may increase in the first half of the year, it will be hard for steel companies to make obvious increases in profits, given that the industry still has severe production overcapacity and iron ore prices may further increase, Wang noted.
Though domestically produced iron ore is increasing, China still imports over 50 percent of its iron ore, according to data from Lange Steel.
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