Chemical prices rising across the globe

An increasing number of metals and chemical manufacturers are hiking their prices, citing the spiraling oil and fuel costs.

The moves, following two recent price hikes by Dow Chemical Co and huge increases in surcharges by AK Steel Holding Corp, has prompted debate on whether asking customers to cover extra production costs will hurt demand.

U.S. Steel Corp Chief Executive Officer John Surma even raised the specter of some customers balking and turning to alternatives, rather than pay more.

"At what point does the price of steel affect the demand for our product?" Surma asked at a steel conference last week.

"If the market decides that the price of steel is prohibitive, a shift to plastic products, aluminum, concrete, wood or other alternative materials will surely follow, and demand for our product will fall," he warned.

His comments came as steel prices are soaring, driven in part by demand from China and other emerging economies. But along with the price hikes, the cost of energy and raw materials, such as iron ore and coking coal, have added to the expenses of the steelmakers.

"U.S. (steel) manufacturers have been able to push cost increases, while their margins are also expanding dramatically," said Sam Halpert, a steel industry analyst at Van Eck Global, a money management company.

"They are generally lower-cost producers and can say: 'Pay the cost increase or go elsewhere for your steel.'