The price of steel is rising and could cause further struggle for the construction industry worldwide.

The global steel industry is facing increasing pressure to hike its prices as the negotiation of iron ore contracts is tightening supply for commercial construction projects.

It is understood that steel prices could rise by about a third in 2010, as steelmakers in countries such as Japan and China have been forced to absorb the cost of raw materials.

Tokyo Steel Manufacturing Co., Japan’s largest electric furnace mill, will raise steel prices in May by as much as 9.9% for the fourth straight monthly increase; the prices of all products, including construction beams and hot coils, will be increased by between 3,000 yen ($32.6) a metric ton and 7,000 yen.

Managing Director Naoto Ohori, who announced the news to reporters in Tokyo today, said: “It’s becoming clear that production costs will go up significantly, as demand for steelmaking ingredients persists due to a global demand recovery of steel products.”

The price of H-beams, used in construction for commercial buildings such as skyscrapers, will be raised 6.8%, or 5,000 yen a ton, to 79,000 yen and hot coils by 5.9%, or 4,000 yen, to 72,000 yen. Steel plates will rise 4,000 yen, or 5.6%, to 76,000 yen, Tokyo Steel said.

The world’s largest iron ore supplier, Brazil’s Vale SA, last month broke a 40-year custom of selling products at fixed annual contracts – winning a 90% price increase from Japanese mills for a three month agreement that started at the beginning of April.

The British Constructional Steelwork Association (BCSA) has warned that more steel price rises are on the way and says now is the time for clients to act to secure advantageous prices for building frames and other structural steel applications.

Prices from steelmakers will have increased by around £190 per tonne for the first half of 2010 once rises announced so far take effect. A £50 a tonne rise in March was followed by a £60 per tonne rise to take effect in May.

A BCSA spokesman said: “We anticipate that there will be a further increase of £80 per tonne in June. Hence prices will have risen by some £190 per tonne in the first half of 2010. The price increases are being driven by rapidly rising input costs for iron ore, typically 100%, and coking coal, typically 70%, due to heavy demand for steel in China and India.”

As the commercial property market attempts to right itself, this latest drawback could have a big effect. It entered recession later than other areas of construction due to its focus on large-scale projects, but is now suffering as demand for new office space has greatly fallen over the last year.

According to the Construction Products Association, the industry’s lead trade body, work on new office space fell 27% in 2009 – by a substantial £7 billion.

Of the rise in steel prices, Mike Putnam, UK boss at international construction firm Skanska, told the Financial Times, “While the commercial market was dead last year, there are signs that it is coming back and this is bound to have an impact on that process.”