Steel players in the country seem to be in no mood to take steel secretary Atul Chaturvedi’s statement seriously. Chaturvedi on Monday said steel prices will fall in next 10-12 days on positive sentiments. However, steel giants told FE that steel prices will increase in tandem with rising raw material prices.

?There is a possibility of further hike in steel prices,? said an official of a steel company on conditions of anonymity. Industry majors, including JSW Steel, Essar Steel, Tata Steel, SAIL and Ispat Industries, have already increased prices by 3-5% on good demand and firming up of international prices.

In the domestic market, long products, mainly used in the construction activity, prices are currently rallying at Rs 27,000-29,000 per tonne. Prices of flat products, primarily used in automobiles, are currently ruling at around Rs 32,000 to 35,000 per tonne.

?NMDC increased iron ore prices by 11%. Royalty on iron-ore products has also gone up by nearly 10%. All this leads to an increase in our cost of production by about Rs 300-400 per tonne,? revealed a steel producer, adding that if prices of raw material continue to increase, steel prices to will rise.

UBS Investment Research also highlights that global export steel prices are expected to rise in the first half of 2010.

Iron ore contracts prices, which are set for re-negotiation, are expected to be finalised at around 10-25% higher than 2008-09. Iron ore contract prices in 2008-2009 were sealed at $75 a tonne, while coking coal prices stood at around $300 per tonne. However, currently long-term coking coal prices fell to $128 per tonne, but spot market prices are ruling slightly higher.

Spot prices of iron ore and coking coal have moved up with the spurt in Chinese steel production as well as due to its rising import dependency for raw materials.

Meanwhile, prices in the international market are also firming up, which will be followed by the domestic players too. In Asia, Japanese mills are planning to raise hot rolled coil (HRC) export prices by $50 per tonne in the first quarter of calendar year 2010.

Industry sources said, ?Steel sector Ebitda per tonne could come under pressure during April to June 2010 once higher input prices kick in as there is still a considerable level of over-supply in the western world.?