Traders and analysts have forecast steel demand to warm up in September after flat steel producers, mainly state-owned majors, faced shrinking margins on high iron ore costs and weak downstream demand from automakers to producers of home appliances.

"The traditional peak consumption season is approaching, and demand for flat steel products will improve in September," said Hu Zhengwu, researcher with consultancy Custeel.com.

In an announcement on its website (www.bsteel.com.cn), Baosteel said prices of hot-rolled products for structural use would rise by 60 yuan ($9) per tonne, and other grades would remain steady.

Prices for cold-rolled steel would rise by 120 yuan per tonne, it said, after keeping prices for its main products mostly unchanged for August.

Domestic car sales in July rose 6.7 percent from a year earlier to 1.01 million units, picking up momentum from the previous month, the China Association of Automobile Manufacturers (CAAM) said on Wednesday.

Daily steel output has stood at more than 1.9 million tonnes since February as steel mills raised production to meet strong demand from the construction sector.

"Flat product demand hasn't picked up substantially yet, but I expect the market will improve in the fourth quarter and steel mills will see higher margins," said a trader in Beijing. "Uncertainty in the global economy will weigh on the steel market."

Baosteel's pricing moves usually set the tone for the industry as a whole, and other mills are likely to follow suit in expectation of increased demand after the summer.

The company also said it would raise the price of hot-dipped galvanised coil by 150-200 yuan per tonne and maintain plate prices unchanged for September. ($1 = 6.394 yuan)