STEELMAKER Corus is expected to raise prices after City analysts increased their projections for the company's pre-tax profits for the year to £400m.

The company, which reported its first profits in a troubled five-year history on Thursday, said it planned to raise steel prices for some of its biggest customers.

The company, which employs 3,000 people at its plant on Teesside, announced profits of £163m, compared with a loss of £89m at the same time last year.

However, chief executive Philippe Varin said that although the company had laid the foundations for a turnaround, profits were still not high enough. Globally, steel prices have rocketed, helped to a large degree by strong demand from China and signs of economic recovery in most developed countries.

Price increases of up to 100 per cent on some grades of steel have meant most large steelmakers are announcing big rises in profits.

Corus has suffered record losses totalling £1bn and shed thousands of jobs since its creation five years ago, following a merger between British Steel and Dutch company Hoogovens.

The company was also racked by internal divisions between its UK and Dutch managers. But the turnaround in profits has prompted City analysts to increase their projections for the company, as sales rose 11 per cent to £4.5bn, while earnings per share were 2p, compared with a loss last time of 3.88p.

However, the improvement in fortune has not stopped speculation that the Teesside site, which will operate as a stand-alone company from 2006, will be sold off.

It is believed Corus wants to sell 80 per cent of the Teesside operation, which is currently undergoing a renaissance because of a worldwide shortage of the type of unfinished steel slab made at Redcar.