Prices of HRC, which had stabilised after the weakness seen in July-August, went up by Rs 500 a tonne to Rs 25,000 this month. Steel industry sources said the price increase this time could be around Rs 1,000 a tonne. 

Though steel companies are unwilling to comment officially, sources said internal discussions have already started on the exact timing and quantum of the price rise.

A top executive of a large steel company said they would take a call on the issue towards the end of this month. 

The reasons for the sharp rise in global steel prices are many. After four months of weak prices, many of the mills have shut down furnaces in the US.

Moreover, China has shut down some of its inefficient capacities and is planning to clamp down on exports, which augur well for the price rise all around the world. Due to the dual effect, steel prices in the US are at a premium of $100-$200 per tonne over Asian prices.

This spiralling price rise could have been checked had China started exporting more. However, China's export numbers last month did not show any sign of growth. China exported a shade over 4 million tonne last month.

Last year, the steel guzzler produced 418 million tonne of steel, which is expected to touch 472 million tonne this year. However, this target does not seem to be within reach as many mills closed down in China recently.

Analysts say Japan is likely to see rebound with rising forecast from the auto makers while West Asia is in the midst of a spate of construction activities.

While the impending price increase appears to be good news for steel companies, the user industries are at the receiving end. An executive of a steel company, which supplies to car companies, says the cost of steel could go up by Rs 3,000 per car if the steel firms decide to pass on the entire burden of the increase in international steel prices.

Budget 2007: Complete Coverage