Steelmakers and steel exchange traded funds (ETFs) are girding themselves for a prosperous 2010 after a prominent analyst forecast higher prices for the metal. Following close behind could be coal prices, which are predicted to surge 30% next year.

Recent price hikes for steel from several U.S. steelmakers has put the pressure on for higher steel prices early on next year. First quarter domestic steel prices are anticipated to go up as the pickup in demand will result from a recovery within the sector. Reuters reports that inventories at the mill, distributor and consumer level often provide a cushion against demand swings. [Why steel demand is up.]

The cost of producing steel is certainly rising. According to The Hindu Business Line, the iron ore prices, which have seen a surge since the lows of June of about $50-60, are now trading at around $90-100 range, while coking coal prices saw lows of around $120 are now trading at around $170. Both of these are used to produce steel. [Coal prices are fluctuating.]

Analysts expect iron ore and coal prices to rise by as much as 30% in 2010 and steel prices are expected to follow suit. [Why hard asset commodities make a strong play in a recovery.]

For more stories about steel or coal, visit our steel or coal categories.

  • Market Vectors Steel (NYSEArca: SLX): up 111.3% year-to-date

  • Market Vectors Coal (NYSEArca: KOL): up 144.5% year-to-date

  • PowerShares Global Coal (NYSEArca: PKOL): up 135.6% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.