MUMBAI (Commodity Online): At a time when India's steel industry is slowly rising prices, its counterparts in the US are struggling to do the same as the production costs have gone up.

But, the US steel industry is very skeptical about the prices rise as the demand for steel is yet to pick up properly in the country.

Even as India and China are witnessing a major surge in demand for steel, the US industry is still slowly picking up pace.

However, production costs like iron ore, metallurgical coal and natural gas, are already slated for sharp gains in the first half of 2010 in US.

According to market analysts, the strength of US demand for steel should be the key topic discussed as conferees gather this week in Florida for American Metal Market's State of Steel 2010 conference.

Prices are rising on all steelmaking inputs. Iron ore prices are projected to rise between 30% and 40% in 2010 because of heavy Chinese demand.

US steelmaker AK Steel Holding Corp said it expected iron ore prices to rise 20-25%. Natural gas prices more than doubled from late summer lows. Early projections call for 2010 contracts for metallurgical coal to be up 10-15% from a year ago.

Electricity prices will increase to reflect higher coal and natural gas prices. Scrap prices too have rallied, with analysts citing lows of $86 a tonne hit last March that recently rocketed up to about $300 a tonne, near 2008 levels at the peak of the boom cycle.

Anticipation of spot iron ore price increases has contributed to the rise in scrap prices.

Whether demand for US steel remains intact or not is the big question now. Last week, the US steel capacity utilization rate was 64.7%, a 20% increase over the year ago week when the US capacity rate was 42.4%. The US produced about 1.56 million short tons last week compared with 1.01 million short tons in the same week last year.

Analysts noted some pick in flat steel demand as auto output rises. Though auto production has improved over 2009 level, it continues at a modest pace. Long products or beams, however, are running at about a 30% operating rate.

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