[R]6:30PM New York – Steelmakers expect to raise prices as long as raw materials costs rise.[/R]

There is likely to be no respite from the rise in steel prices for auto and consumer durables companies as more steel makers hint of raising prices. Arcelor Mittal increased prices for steel to be delivered in July and August to 720 euros per ton.

For now steel companies are still enjoying higher operating margins than most auto and appliance makers but those margins are declining rapidly. Coking coal, iron ore and electricity costs are rising across the globe. Australian and Brazilian iron ore miners have increased prices between 65% and 70% for iron ore shipment and Australian and Canadian coal exporters increased prices of coals between 60% and 200% depending on the grade.

Operating earnings growth at ArcelorMittal and ThyssenKrupp slowed down in the most recent quarter as consumers resist the price hikes.

ArcelorMittal, the largest steel maker added 4.15% to 64.70 euros in Amsterdam trading and closed at $97 in New York after it reported first quarter profit rise of 5% to $2.4 billion. The largest steelmaker lifted the second quarter profit outlook. Shipment in the quarter rose 8% to 29.2 million tons and sales rose 22% to $29.8 billion from a year ago. In the quarter the company paid dividend of $0.5 billion and bough back $2.1 billion of stocks.

Chairman and CEO Lakshmi N. Mittal said, “We have also now fully captured the $1.6 billion of synergies that we announced we expected from our successful merger with Arcelor. Looking forward, we expect EBITDA in the second quarter to be higher than in the first quarter to exceed $6.5 billion, largely on account of strong demand for our products across all regions.”

In New York trading ArcelorMittal (MT: chart) rose as high as $100 but closed in the final hour sell-off.

ThyssenKrupp reported second quarter revenue rose 1% to 13.2 billion euros and net income increased 106% to 502 million euros. Orders received in the quarter rose 1% to 14 billion. Earnings per share rose to 1.85 euros from 1.76 euros.

The company press release added, “For the current fiscal year we expect world crude steel production to increase to 1.43 billion metric tons. In our core European market, which remains relatively robust, all the signs indicate a further rise in steel consumption, albeit below the high growth rates of the previous two years.

Steel prices will continue to be determined to a large degree by high raw material and energy costs. In supply year 2008/2009 European producers will have to contend with price increases of 65% for fine ore and almost 87% for pellets. Prices for high-quality Australian coking coal will increase by as much as 200%.”