China's steel prices will continue to stay high this year, pushed up by booming demand and rising costs, say domestic industry experts.

Steel prices still had room to expand, and the per-ton price would break the US$1,000 threshold in the near future, Monday's China Securities Journal quoted Zhou Xizeng, a leading analyst with the CITIC Securities as saying.

A supply shortage was expected in the domestic market as the installment of newly-developed production capacity could not keep up with the government's steps to eliminate outdated capacity.

This would further widen the gap between demand and supply when reconstruction after the severe winter weather and rising investment in real estate required more steel.

Jia Liangqun, analyst with the mysteel.com, said booming domestic demand would be the main factor driving up prices. Raw material costs, including those for iron ore and coal coke, also boosted prices.

At least 57 domestic steel mills have raised their prices since the benchmark price for iron ore was settled.

Baosteel, the country's largest steel maker, announced last month that it would raise steel prices for the second quarter of 2008, in some cases by as much as 20 percent, after accepting Brazilian mine giant Vale's 65-percent iron ore price rise.

Steel prices have surged 10 percent this year, and were up 23 percent in March over the same time last year, statistics from China Iron and Steel Association show.

(Xinhua News Agency April 1, 2008)