Steel prices will continue to remain at high levels this year, with mild fluctuations, on the back of rising raw material costs and a shortage of iron ore, a top industry association official said on Wednesday.

The big three global miners, BHP Billiton, Rio Tinto and Vale, are taking advantage of the global scenario of supplies falling short of demand to push for higher iron ore prices, said Luo Bingsheng, vice-chairman of the China Iron and Steel Association (CISA).

China's first quarter crude steel output rose 24.5 percent from a year earlier, while production in the rest of the world grew 33 percent during the same period.

Crude steel output from countries with large iron ore imports like Japan and some European countries rose 50.7 percent and 37 percent respectively, he said.

Steel prices will fluctuate on the higher side, despite the recent decline, he said.

Prices of construction steel products dropped by 20 yuan (2.93 U.S. dollars) to 40 yuan per ton on Wednesday in Shanghai, on smooth market trading volume, according to Mysteel.com.

The agency's composite steel price index, a major gauge of domestic steel prices, dropped 169 points last Friday, down 0.6 percent from the previous week after the government released macro economic policies to rein in property prices.

Steel inventories in 20 major cities declined 9 percent to 9.77 million tons by last week, while steel inventories rose 34 percent to 10.74 million tons by the end of March, he said.