It was reported that after the government restrained lending, Baoshan Iron & Steel Co., China’s largest steelmaker, kept prices for its main products unchanged for February delivery.

Prices were kept level for most flat products, including hot-rolled, cold-rolled, zinc-galvanized sheets and silicon steel, from January, the Shanghai-based steelmaker said today in a statement on bsteel.com.cn, its trading Web site.

“The market has widely expected that Baoshan would raise prices for February,” said Luo Wei, a Shanghai-based analyst with China International Capital Corp. “Baoshan made such a decision probably because the government is tightening.”

China raised the proportion of deposits that banks must set aside as reserves this month, faster than economists expected, as record lending threatens to stoke inflation and create asset bubbles.

Rising steel demand prompted Baoshan Steel to raise some prices for January by 8 percent, the first gain since September.

Baoshan Steel shares rose 0.6 percent to close at 8.71 yuan in Shanghai. The benchmark Shanghai Composite Index gained 1.4 percent.

Chinese steel prices have surged 18 percent since Oct. 15, a low in 2009, as the government’s $586 billion stimulus spending boosted demand, and manufacturers and traders ran down inventories.

According to statistics released by the Ministry of Industry and Information Technology yesterday, China’s steel industry realized profits of RMB 143.3 billion in the first 11 months of last year.

The country’s major steel mills earned a combined profit of RMB 44.8 billion in the period, 67% less than in the same period of the previous year, said the ministry.

In 2009, the country eliminated 21.2 million tons of outdated iron smelting capacity and 16.9 million tons of steel smelting capacity.

In the period from January to November last year, the country’s steel output rose 12.1% year on year to 520 million tons, the total output last year is expected to reach 565 million tons.

It was reported that China’s surging demand for steel this year is expected to dominate the landscape of the steel industry as never before.

Already the world’s largest producer by far, the country is expected to rev up production by nearly 10%. But the higher output likely won’t exceed demand, pushing prices higher world-wide for steel, its raw materials and even coal.

Steelmakers, which idled dozens of mills and cut production as the global economy slowed, are now ramping up. Rio Tinto, which sells the most iron ore to China, is restarting production. Iron ore is a key ingredient in making steel. Arcelor Mittal, the world’s largest steel producer, is raising prices, as is China’s largest steelmaker Baosteel Group Corp.

China also is trying to unify a fragmented and sprawling domestic industry to present a strong, unified voice in price negotiations for sales and purchases of raw materials. The idea: Capitalize better on the country’s huge appetite for the materials that make everything from refrigerators to bridges.

China is expected to produce a record 600 million metric tons this year-about half the world’s total output. The next biggest producer, Japan, will make just one-sixth of what China is expected to produce. The U.S. was fourth in production, behind Russia, last year.

China’s continued resilience was the dim light in an otherwise dreary year for miners and steelmakers, marked by layoffs, mine closings and production and investment pullbacks as prices for commodities tumbled. And it looks to be the beacon going forward, along with India, to a lesser extent.

While other economies are strengthening, they don’t offer the same potential for growth as China, which makes penetrating that market critical. “Chinese steel production and demand is likely to continue its inexorable rise,” says Peter M. Fish, economist for MEPS International, a steel consulting firm.

That, in turn, is good news for all metals and minerals sellers.

Iron-ore spot prices, at about $110 a metric ton, have been climbing toward their highest level in more than a year. Coal prices for steel mills and electricity production have surged by more than 30% as the Chinese last year curbed production due to environmental concerns. Copper, aluminum and zinc prices also have risen.

“The recovery of all commodities has exceeded expectations,” says David Butler, analyst at J.P. Morgan Cazenove.

Australian ports are becoming congested again, with coal ships in line on the ocean, waiting to load and unload.

Robin Walker, a spokesman for Rio Tinto, the largest seller of iron ore to China and which sells a substantial amount of coal, says its economists are revising projections from August regarding Chinese demand. “The new update could show that growth is stronger,” he says.

BHP Billiton, the world’s largest miner, Rio Tinto, Australia’s Fortescue Metals Group Ltd. and Brazil’s Vale all are increasing production of iron ore, and in some cases coal, to meet the expected increased demand in China.

China’s Baosteel, an industry bellwether, told buyers last week that it would increase steel-sheet prices by 5% beginning in February, marking the third steel price increase in as many months.

“With January hikes now sticking well, we expect to see further price increases announced in China as well as Europe and the US,” says Michelle Applebaum, an analyst at steel research firm MARI in Chicago. “Chinese steel demand is profound, and rising raw-material costs are driving an inflationary spiral in the region as steelmakers and their customers clamor for material.”

Massive government stimulus and infrastructure plans-including for rails, roads and bridges in eastern China and for general construction and factory building in the western part of the country)-are fueling demand. Most of the steel production will be consumed internally, says the China Iron and Steel Association, the main steel trade group in the country.

China’s exports have dropped between 10% and 50%, depending on the product and country in the last year, which is welcome news for ArcelorMittal Chief Executive Lakshmi Mittal. Mr. Mittal says that last fall, China’s steelmakers remained fairly disciplined about keeping their steel from flooding foreign markets, which has helped steelmakers around the world raise prices.

The downside for ArcelorMittal and other steelmakers is that raw-material prices will likely rise as the companies compete with Chinese steel mills to secure the coal and iron ore needed to fuel and feed steel plants.

This week, Australia and China signed a $3 billion coal deal, the largest buyout by a Chinese firm in Australian mining history. The purchase of Australia’s Felix Resources Ltd. by Yanzhou Coal Mining Co. could open the door to more acquisitions this year.

It is reported that Shanxi Economics and Information Committee made a detailed plan to adjust and revitalize its steel industry, which is an important tax payer and job supplier in the province.

Local business newspaper reported the province cap pig iron and crude steel outputs at 45 million tonne and 40 million tonne respectively by 2011.

The Committee said that by 2008, Shanxi has about 78 above designated scale steelmakers, posting sales income of CNY 165.2 billion which have pig iron capacity of 54 million tonne output of 27.82mt; crude steel capacity of 40 million tonne, output of 23.45 million tonne and steel product capacity of 26 million tonne output of 19.76 million tonne.

Next step, the province will move on to expand stainless capacity and quicken development of the product varieties, on the basis of Taigang’s existing stainless capacity. An international stainless production base is targeted to be made. On the meantime, the province purposes to make merger, acquisition, elimination, and upgrading to forge steel bases in Changzhi, Yuncheng, Linfen and Lvliang. It already has big steel complex such as Haixin Steel, Zhongyang Steel, Zhongyu Steel and Changzhi Steel in these places.

By promoting Taigang to take over Antai Steel and other smaller mills, the plan hopes to raise its capacity up to 70% of the province’s total.

It is said that General Steel Holdings Inc. fell in New York trading after the Beijing-based steelmaker would raise about $25 million in a sale of shares and warrants.

General Steel dropped $1.22, or 21 percent, to $4.57 at 1:05 p.m. in New York Stock Exchange trading. The shares have risen 16 percent this year.

The company earlier today announced plans to sell 5.56 million shares and warrants to purchase as many as 2.78 million additional shares. The funds will be used for “general corporate purposes which may include working capital, capital expenditures, acquisitions of new businesses and investments.”

General Steel said in a statement April 8 it was starting discussions with a “potential target.” The company’s goal is to become a major steel producer in China, Amit Dayal, a New- York based analyst with Rodman & Renshaw Inc., said in an April interview.

It is reported that Wuhan Iron & Steel Group, China’s third-biggest steelmaker, plans to boost output by 24 percent next year as demand recovers from 2009, which it said was the toughest year in the company’s history.

Wuhan Steel expects to produce 37.9 million metric tons of crude steel in 2010, up from a forecast 30.5 million tons this year, it said in a statement on its Web site today. The group aims to earn 150 billion yuan ($22 billion) in revenue next year, it said.

China’s $586 billion stimulus spending has boosted steel demand from automakers, home-appliance manufacturers and builders. The measure helped domestic steelmakers return to profit in May after seven straight months of losses because of the global economic crisis.

This “has been the most difficult year in our history,” Wuhan Steel said. “The economy is improving, but there isn’t a fundamental turnaround. We should grasp the opportunity to overcome the impact of the crisis.”Wuhan Steel’s listed unit gained 0.1 percent to 7.86 yuan as of 11:21 a.m. local time in Shanghai trading, compared with a 0.3 percent decline in the benchmark Shanghai Composite Index.

China’s steel output may exceed 600 million tons next year, after reaching a record 570 million tons this year, the China Securities Journal reported Dec. 17, citing Ma Guoqiang, general manager of Baoshan Iron & Steel Co., the listed unit of the nation’s largest steelmaker.

Rising steel demand and prices in China, the largest producer of the alloy, led analysts to predict higher prices of raw material iron ore and coking coal next year. Macquarie Securities Group forecast a 30 percent gain in iron ore prices and Citigroup Inc. predicted domestic coal prices in China may rise 14 percent.

Still, a severe steel oversupply in China has overwhelmed demand, leading to high inventories, Wuhan Steel Group’s general manager Deng Qilin said Oct. 14. China is studying a “more feasible” plan to tackle steel overcapacity, the Ministry of Industry and Information Technology said this month.

It was said from the statement that Wuhan Steel also will progress with its 10 million ton steel project in the southern province of Guangxi and a plan to build a steel plant in Brazil.

According to figures from industry consultancy Mysteel, China’s daily crude steel output reached 1.646 million tonnes in the first 10 days of December, down 1.5 percent from the end of November.

While daily output has slowed slightly amid a seasonal lull in end-user demand, the figure remains much higher than the January-November average of 1.55 million tonnes, with mills and steel traders building stocks before a series of price hikes in January.

Total output from January to November reached 518.177 million tonnes, up 12.1 percent compared with the same period last year.

According to Minister of industry and information technology–Li Yizhong, China, as the world’s top steelmaker, closed 16.9 million metric tons of obsolete capacity this year as part of an effort to ease domestic oversupply, .

The nation also shuttered 21.1 million tons of iron-making capacity; 800,000 tons of aluminum capacity; and 74 million tons of cement capacity, Li said today at a conference in remarks broadcast on the Internet. The figures beat targets set by the Ministry of Environmental Protection earlier this year.

China, also the world’s biggest producer of iron, cement and aluminum, is facing a severe oversupply of steel as mills expand faster than outdated plants are closed. The government is studying a “more feasible” plan to tackle steel overcapacity, Li’s ministry said on Dec. 3.

“The 2 percent cut in capacity by the Chinese steel industry is truly a spit in the ocean,” Michelle Applebaum, who runs a steel-research firm in Highland Park, Illinois, wrote in an e-mail. “Many of the country’s high-cost and polluting, older provincial mills continue to run for jobs rather than profitability,” said the analyst at Michelle Applebaum Research.

Steel capacity in China may have reached 700 million tons or more, Xiong Bilin, deputy director at the National Development and Reform Commission’s industry department, said on Dec. 3. The nation may need 549 million tons of the alloy this year, the China Iron and Steel Association said in November.

“Investment has risen too fast in some industries in recent years,” Minister Li said today in the Web cast. “There are blind expansions in steel and cement. A large amount of obsolete capacity needs to be closed.”

China had planned to shut 6 million tons of steel-making capacity and 10 million tons of iron-making capacity this year, the Ministry of Environmental Protection said on Jan. 13. The Ministry of Environmental Protection said on Nov. 13 that the government is planning measures to close plants in the steel, aluminum, coke, cement, paper and utility industries.

It is reported that China (its major ports), the world’s biggest iron ore buyer unloaded 35 percent more of the steelmaking ingredient last month from a year ago.

Ships unloaded 56.5 million metric tons of iron ore in July at major ports, the Ministry of Transport said on its Web site. The ministry didn’t provide comparative figures.

Crude steel output in China jumped to a record in the first half and cash iron ore prices have gained 33 percent this year as a $585 billion stimulus by the government improves building demand and auto purchases. The China Iron & Steel Association has blamed traders for the rising imports, which have hurt its ability to negotiate for lower contract prices.

“The increase in iron ore imports in July was partly boosted by small steelmakers buying ore at lower spot prices,” said Roslyn Ji, an analyst at Core Pacific-Yamaichi International Holding in Beijing.

Spot iron ore prices traded at $95.30 a ton yesterday according to the Steel Index. They averaged $83.436 a ton in July. Chinese steelmakers are stalled in talks to agree on benchmark contract prices with suppliers Rio Tinto Group, BHP Billiton Ltd. and Vale SA. The mills buy ore from mines in Australia, Brazil and India.

Record ImportsIron ore imports hit a record 57 million tons in April, according to general customs. Imports by traders accounted for 44 percent of purchases in the first half, the steel association said last week, compared with 30 percent a year earlier.

“In the second half, China may cut its reliance on imports because higher prices may prompt mills to use domestic ore,” said Umetal Research Institute analyst Du Wei.

Container volumes handled by major Chinese ports fell 3.8 percent to 10.1 million 20-foot standard containers, the transport ministry also said today. That’s the lowest level of decline this year.

“China container traffic, relying mostly on exports to the U.S. and Europe, still needs time for a full recovery,” said Core Pacific-Yamaichi’s Ji.

Former Federal Reserve Chairman Alan Greenspan said Aug. 2 that U.S. economic growth may resume at a rate faster than most economists forecast.

It is also said from the ministry that total cargo volumes at the ports rose 13 percent to 500 million metric tons in July from a year ago.