After rolling back prices earlier this month to help the government keep inflation in check, steel companies are gearing up to increase prices by Rs 500-1,000 per tonne from April 1.

The industry plans to raise prices cautiously though landed import prices are higher than domestic prices by Rs 2,500-3,000 per tonne.The ruling price of hot rolled coils (HRC) stands at Rs 27,000 (approximately $613) per tonne.

Although there is no domestic scarcity yet, this position might change from April 1 with an expected $30 to $50 a tonne increase in international prices, making exports more lucrative.

The price hike will put the industry in confrontation with the government. Soon after the Budget, Finance Minister P Chidambaram had asked manufacturers to hold the price line to help the government rein in inflation. Cement producers, for instance, have committed not to raise prices for a year. Both steel and cement form a part of the Wholesale Price Index.

Industry representatives have already conveyed the price disparity to the Steel Price Monitoring Committee set up by the government to track prices in domestic and international markets.

"We can't keep on increasing prices and rolling them back, so it's better to have the government's approval in the matter," said an industry source.

However, Steel Secretary R S Pandey said the ministry has not received any such proposal. "The industry is free to fix prices and the government does not control it. The government had expressed its concerns when prices were increased at the beginning of the month, but it is up to them to decide whether they want to increase or decrease prices," he added.

Last month, steel producers agreed to partially roll back the increase of Rs 700-1,200 per tonne in hot rolled coil (HRC) prices following an appeal from Union Steel Minister Ram Vilas Paswan.

The rollback was 100 per cent in case of TMT bars and galvanised corrugated products, which are items of mass consumption, and 50 per cent for HRC.

Steel prices were raised several times in 2006 and then started sliding in August, with the first cut being initiated in September. The first increase this year happened in February. The industry expects prices to hit an all-time high this year with major user-countries like Russia turning an importer and China curbing exports.