The Eastlands outfit were preparing to open the bidding for the Brazil ace with a £20m offer. But Porto want £36m for the 24 year-old, who can play on either flank or through the middle.
That tops the £32.5m City splashed out to sign Robinho from Real Madrid three years ago.
Hulk, who smashed 31 goals in 42 games to help fire Porto to a league and Europa Cup double, has a massive £89m buyout clause in his contract, which he recently extended until 2016.
City will hope to talk Porto into lowering their demands with Hulk keen on a move to England.