As a signal that the government’s stimulus spending is improving demand from automakers and builders. It is reported that Wuhan Iron & Steel Co., China’s third-biggest steelmaker, raised prices by as much as 12 percent for August delivery, signaling.

Cold-rolled prices were increased by 480 yuan ($70) a metric ton, and hot-rolled coil by 240 yuan, Board Secretary Wan Yi said today in an interview. This would be the third month the Hubei province-based mill has raised prices for cold-rolled products, Umetal Research Institute said.

Benchmark Chinese steel prices have gained 15 percent since April 1 as Wuhan Steel, Baoshan Iron & Steel Co. and Maanshan Iron & Steel Co. took advantage of recovering demand. The improvement may make it harder for Chinese mills to ask Rio Tinto Group to cut iron ore prices by more than 33 percent.

“Economic statistics show steel demand is gradually picking up,” Hu Yanping, a Beijing-based analyst with Umetal, said by phone. “China may find it difficult to achieve its demand in contract iron ore price talks.”

Wuhan Steel rose 2.7 percent to 8.82 yuan in Shanghai trading, compared with a 1.1 percent decline in the benchmark Shanghai Composite Index. The stock is up 85 percent this year.

The price increases translate into a 12 percent hike to 4,450 yuan, excluding tax, for cold-rolled products, Umetal said. Hot-rolled prices would increase by 6.9 percent to 3,740 yuan, it said. Wuhan Steel’s Wan didn’t give details.

Public WorksSpending on public works and infrastructure projects by countries including China is lifting steel demand globally.

Chinese steelmakers are locked in talks to settle annual contract iron ore prices with London-based Rio, the world’s second-largest supplier of the steelmaking ingredient. The mills may consider trimming their price cut demands of as much as 45 percent, it is said that July 2. Rio agreed to a 33 percent cut with Japanese and Korean customers.

It is reported that the annual iron ore price talks between Chinese steel makers and the world’s biggest iron ore miners will continue past the deadline (tuesday).

China is still in talks with major iron ore firms for the annual supply deal, Chen Xianwen, director of the market operations department of the China Iron and Steel Association (CISA), told Xinhua Tuesday.

The CISA heads the talks on behalf of China’s steel-makers.

“We are officially in discussions still,” said Gervase Greene, spokesman of Rio Tinto, in an email to Xinhua late Monday.

Chen said that the CISA still insisted that the iron ore prices should fall back to 2007 levels, which meant a price cut of more than 40 percent in the annual contracts of iron ore.

The CISA said in a statement on May 31 that China’s steel companies would refuse to accept the 33-percent price cut reached between Rio Tinto and Japan’s Nippon Steel Corp.

The price cut would lead to overall losses for Chinese steel companies, the CISA said in the statement.

The Chinese side was working to seek a cut of more than 40 percent.

Both Chen and Greene refused to comment further on how the talks were progressing.

If the CISA failed to reach a supply agreement with any of the three biggest mining companies — Vale of Brazil, Rio Tinto and BHP Billiton — Chinese steel makers may have to turn to the spot market for supplies.

Spot iron ore prices raised the highest in four months and above the annual benchmark level agreed between the three miners and big steel makers elsewhere in Asia.

According to the latest data from Mysteel, China’s daily crude steel turnout continued to climb in late May, increasing about 74,000 tons over mid-May.

The data show that the country’s daily crude steel output averaged 1.485 million tons in the last ten days of May. The figure could be annualized to 544 million tons this year if the momentum is kept, compared to about 500 million tons last year.

China’s Ministry of Industry and Information Technology earlier pointed out that in the face of steel industry’s severe overcapacity, the domestic steel market only needs an annual output of 470 million tons to keep the market balance this year.

The country’s daily output of crude steel maintained at around 1.4 million tons in March-April, but started a sharp rise since May and has recorded an average level of 1.48 million tons.

The home steel market has been rallying up for seven straight weeks, providing the back for the increase of steel output.

Prices of steel products such as building steels, medium plate, and hot-rolled steel coils all rose recently. Meanwhile, large steel enterprises also adjusted up their ex-factory prices.

Because the steel production continued to be expansion, some experts worry that it may press down steel prices again.

The China Iron and Steel group said Tuesday it opposes the iron ore joint venture between mining giants Rio Tinto and BHP Billiton.

“The joint venture agreement has a strong monopolistic color and Chinese steel mills will resolutely oppose the agreement,” the CISA said in a statement on its website.

“The iron ore trade is gradually advancing in the direction of monopoly,” the association said. The joint venture has a direct bearing on the interests of Chinese steel plants as China is the biggest buyer of Australian iron ore, it added.

China should have a say in the iron ore trade, especially in Asia, according to the statement.

The CISA said it will allow no market speculation on iron ore trade on the domestic market. It also urged regulators to revoke the licenses of these iron ore importers which were found to have engaged in speculation.

Rio Tinto scrapped a proposed 19.5 billion U.S. dollars of investment by Aluminum Corp. of China, or Chinalco, on Friday.

The world’s third-largest mining company has announced a joint venture with BHP Billiton, the world’s second-largest. In the agreement, BHP would pay Rio Tinto 5.8 billion U.S. dollars to jointly run iron ore resources of both companies in west Australia.

Mei Xinyu, an economist with the Ministry of Commerce, told Xinhua Monday that China should closely watch the joint venture process and be ready to work with other countries to curb market manipulation when necessary, with the help of anti-monopoly law.

Rio Tinto agreed to a 30 percent price cut with its Japanese and Korean customers, but the Chinese group said even that level for the buying year that begins June 30 would result in losses for China’s mills.