XFN-Asia reported that Macquarie has upgraded China's Maanshan Iron and Steel's Hong Kong listed shares to outperform from neutral with strong steel prices offsetting the company's rising raw material costs.

Macquarie said sharp rises in spot hot-rolled coil prices in China have created a strong potential upside for the company's earnings. It said that "We anticipate that we will see further steel price forecast increases so we believe there continues to be upside risk."

Macquarie added that the company's share price has fallen substantially in recent weeks, with iron ore and coking coal prices soaring, making Maanshan the cheapest stock in our Chinese steel universe. It has raised its earnings forecast for the company by 4% for 2008 and 3% for 2009 to reflect sharp steel price rises and new raw material assumptions.

Macquarie's target price for Maanshan Iron and Steel remains unchanged at HKD 5.10.