Five reasons why steel prices are rising

Demand:

World steel demand continues to grow, notably from newly industrialised countries, and this has put steel mills and their raw materials suppliers under pressure. While Chinese demand has abated slightly, it is still nearly double the global average.

Material costs:

Constantly increasing demand puts pressure on steelmaking raw materials. Since 2004, iron ore prices have increased by nearly 300%, while coking coal prices remain at historically high levels.

Shipping:

Driven by a shortage of vessels, shipping costs have escalated. By December last year, one-time charter rates were 250% higher than the 2006 average.

Energy costs:

Like the rest of UK manufacturing, the steel industry has been experiencing high energy prices. Forward prices for both gas and electricity are showing high increases, with the UK electricity prices outstripping those on the continent.

Legislation:

The extension of the EU's Emissions Trading Scheme may extend to even more steel companies and more installations. Environmental costs imposed will be passed down the supply chain.