Indian steel prices are expected to rise further in the coming weeks as demand recovery from infrastructure and automotive sectors tightens supply, while higher coking coal costs push up production expenses, executives and analysts said.

Indian mills trimmed prices of products such as hot-rolled coil (HRC) by 280 rupees ($2.95) per tonne during June-July, according to government data cited by Reuters.

However, HRC prices climbed 4,000 rupees/t between August and early September to the highest level in four years, consultancy BigMint said.

The strong rebound was driven by planned maintenance shutdowns at major mills, tighter spot supply and lean distributor inventories, according to BigMint.

Shankhadeep Mukherjee, chief steel analyst at London-based consultancy CRU, noted that mills have been passing on cost pressures as coking coal accounts for a significant share of production costs.

"We expect steel prices to increase by around 3,500 rupees/t in the coming weeks," Reuters quoted Vedant Goel, director at Enlight Metals, as saying.

A senior executive at a large steel mill also said prices were likely to rise further in the near term, supported by maintenance outages, post-monsoon restocking, festival demand, project requirements and higher coking coal costs.

However, executives said a sharp rise in steel prices in the coming months was unlikely, as higher imports could limit mills' pricing power.

India imposed safeguard duties on some steel product imports last year to curb a surge in overseas shipments. In June, it also launched an anti-dumping investigation into hot-rolled coil imports from China, Japan and Russia.

Imports have nonetheless recovered. India was a net importer of finished steel between April and July, with inbound shipments up 36.6% year on year, government data showed. 

Fitch Ratings said in a September 1 report that rising imports would remain a key risk to Indian steelmakers' profits if competitive pressures return.