UPDATYE 1-Salzgitter ups steel price as input costs rise

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HANOVER, Germany, June 24 (Reuters) - German steelmaker Salzgitter (SZGG.DE: Quote, Profile, Research, Stock Buzz) intends to raise the price of its flat steel products by up to one-fifth to offset higher raw material costs, a Salzgitter spokesman said on Tuesday.

The price increase, to be implemented in the third quarter, would be 150 euros ($233.3) per tonne, he said.

The hike would take the price of hot wide strip steel, one of Salzgitter's main products, to about 800 euros per tonne, industry sources said, noting that prices vary depending on product category.

Earlier, South Korea's POSCO (005490.KS: Quote, Profile, Research, Stock Buzz), the world's No.4 steel maker, said it would raise steel prices by up to 21 percent to absorb higher raw material costs.

In response, Morgan Stanley raised its 2008 earnings-per-share estimate for POSCO by 5.5 percent, saying in a note that the steel price increase "should help near-term sentiment".

Commerzbank, in a commodities research note, said hot-rolled steel prices in the United States had more than doubled since the start of the year and that in the Middle East, prices of rebars for August delivery had hit record highs.

"These huge prices increases are not only due to strong demand, but also to the much higher costs owing to rising electricity and raw material costs," Commerzbank said, referring mainly to iron ore and coking coal.

Mining group Rio (RIO.AX: Quote, Profile, Research, Stock Buzz) on Monday agreed a near-doubling of iron ore prices with China's biggest steelmaker, Baosteel (600019.SS: Quote, Profile, Research, Stock Buzz).