Tata Steel Ltd.

Iron ore prices are headed as much as 35 percent higher this year and will likely pressure the profit margins of steel companies, according to Tata Steel Ltd Vice Chairman B. Muthuraman. It may be possible that the steel prices may not go up by that much. This means the steel companies will come into margin pressure. Since Steel prices depend on supply and demand, and the demand is not expected to go up sharply this year, so this will put a cap on the steel price increase.
 
Spot market prices for iron ore surged more than two-fold in the last 12 months on strong demand from China and recovery in Europe, and the United States. The price for iron ore remains near $130 a tonne. Also, global miners are currently in negotiations with the world's largest steel producers in setting a key annual iron-ore benchmark price, a bulk discount to the spot price. The iron ore prices are typically set each year following negotiations between big suppliers -- Vale, Rio Tinto and BHP Billiton -- and large steel mills.