Baoshan Iron and Steel Co, one of China's largest steel makers, yesterday said prices of major steel products will rise 150-300 yuan (US$23-US$45) per ton from next month to reflect the recent hike in the futures market and rising raw material costs.

Hot-rolled steel for January delivery will rise 260 yuan per ton and cold-rolled products will go up 200 yuan per ton in January, the mill said in a statement on its website yesterday. Hot-rolled steel prices are now 4,402 yuan per ton and cold-rolled prices are 5,536 yuan per ton.

Market watchers said other major still makers, including Wuhan Iron and Steel and Maanshan Iron and Steel, may follow Baosteel and raise prices in the near future. Last month, Baosteel kept the prices of most products for December delivery unchanged despite recent hikes in the spot market.

The most active May 2011 contract of steel products on the Shanghai Futures Market gained 1.4 percent to 4,779 yuan per ton yesterday.

"Rising raw material costs will keep pushing up steel products," said Luo Wei, an analyst at China International Capital Co Ltd.

Hu Yanping, an analyst at UMetal Research Center, said "strong automobile sales are also expected to boost steel demand and Baosteel has a leading position in auto steel sheets."

Reuters last week cited sources familiar with the matter as saying Rio Tinto had told Chinese steel makers that contract prices for iron ore in the first quarter next year will rise as much as 7.6 percent.

"If it proves to be true, that means iron costs will add about 100 yuan for domestic steel mills," Hu said.