The Centre for Monitoring Indian Economy (CMIE) said in its monthly review of the Indian economy that steel prices are like to fall by 3-5 percent by September due to the expected dip in contract prices of iron ore and coal.

Currently the Indian domestic steel prices have been already 7-8 percent higher than global prices which is indicative of the fact that the prices are yet to be bottomed out domestically.

The uptrend in international prices seen in June might not sustain because of overcapacity in the global steel industry and that the domestic steel prices move in tandem with international prices.

However, CMIE predicted the steel demand will revive in 2009-2010 driven by the high demand of long products used in construction, especially in housing construction in the second half of the year.

This revival will also accelerate Indian steel production growth to 6.5 percent from an estimated 1 percent rise in 2008-2009.