SHANGHAI, Sept 14 (Reuters) - China's Baoshan Iron & Steel (600019.SS: Quote, Profile, Research, Stock Buzz) raised key October prices on Tuesday after government moves to shut its smaller rivals helped tighten supplies in the world's biggest steel market.

The company, also known as Baosteel, will increase low-carbon hot-rolled coil prices by 8 percent or 300 yuan per tonne to 4,142 yuan ($612.8) per tonne, and raise cold-rolled coil prices by 110-200 yuan per tonne, with its main CQ-grade material at 5,336 yuan ($789.5) per tonne.

Baosteel is China's biggest listed steel mill and the country's steel pricing leader, setting the benchmark for other major mills such as Wuhan Steel (600019.SS: Quote, Profile, Research, Stock Buzz) and Angang (000898.SZ: Quote, Profile, Research, Stock Buzz).

The company also said it would raise October prices of hot-dipped galvanised coil by 260 yuan per tonne and heavy plate by 150 yuan per tonne. Electrical steel prices would be raised by a range of 350-380 yuan per tonne, it added.
The October rise was widely expected after the company kept steel prices, which have risen on the domestic market, stable for September.

"We see this as a result of recovering demand and rationalised supply," Citigroup analysts said in a research note.

China's leading steel mills are taking advantage of a wave of production cutbacks, mainly in north China's Hebei province, the country's top steel-producing base.

The mills being told to shut down or cut output are mostly smaller, less efficient facilities which are in the firing line of Beijing's efforts to meet an energy efficiency target by the end of this year.

The order to cut power use has driven up Chinese domestic steel prices and analysts had anticipated it would encourage big steel mills to raise prices in the coming months.

"We expect Chinese steel prices to continue to rise due to fears of both steel and raw materials production cutbacks, particularly as we head into a period of seasonally strong demand," Steel Market Intelligence said in a note.

Some analysts had suggested Baosteel would also remove some discounts to further take advantage of the rising domestic steel market.

However, some industry officials are concerned that market fundamentals are pressured from oversupply for the massive domestic sector, which is also facing more competition from other countries.

"Viewed overall, the basis for a rise in steel prices remains weak, with prices of steel products generally continuing to fluctuate in a medium-low price range," Luo Bingsheng, deputy head of the China Iron & Steel Association, was quoted as saying by China Metallurgical News, a Chinese industry paper.

"This is because the problem of supply exceeding demand within the domestic market has not been resolved," he said.

U.S. Complaints

As the world's largest supplier and consumer, China is facing complaints from other countries which blame it for dumping steel products by providing tax incentives.

On Monday, the U.S. Commerce Department finalised countervailing duties of up to 53.65 percent and anti-dumping duties of up to 98.74 percent on imports of China-made seamless pipe, which is mainly used in the oil industry. [ID:nN13263989]

But external opposition to China's exports has had much less impact than China's own policy. Net exports of steel products have fallen dramatically since China withdrew an export subsidy in mid-July and now account for only a fraction of its output.

In August China produced 69.7 million tonnes of steel products, but its net exports were only 1.45 million tonnes, down from 4.15 million tonnes in June. ($1=6.759 Yuan)