| China's steel prices may go up, driven by the 200 percent coking coal price hike agreed by Japanese and Australian enterprises, according to the Ministry of Commerce.
Statistics show that the average price of steel in China amounted to 5,775 yuan/ton in March, up 9.6 percent over January, as a reflection to the increased iron ore contractual prices.
Coking coal prices rise will further push up the production costs of steel, as expenses on coking coal accounted for 20 percent of the total.
Xu Xiangchun, a senior analyst on steel industry, expects the industry's profitability to reach the annual peak in the second quarter, although the profit growth may not be significant in comparison with the first quarter. Steel prices may drop in the third quarter, due to periodic factors.
The industry's profit margin may gradually decrease, attributed to hiking costs and slowing-down output growth, which tampered enterprises scale advantages, according to Xu.
Although China's coking coal price is unlikely to keep pace with the price soar on the world market, supported by large output volume, it is expected to go up in the long run because China has become a coking coal importer.
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