London, 21 April 2010

Steel prices look set to rise as the cost of iron ore (used in the manufacture of steel) is expected to surge higher as a result of new pricing arrangements between steelmakers and ore miners. With steel-using manufacturers reporting that supply chains are also tightening in response to strengthening demand for steel, steelmakers look well positioned to pass these increases on to manufacturers.

This points to further upward pressure on prices paid by consumers for finished goods which use steel as a key input.

Steel prices jump higher in March

The average quoted price of steel products rose 3.3% in March, taking it 24% above the low reached last May according to data provided by MEPS International. An indicator based on data supplied by steel-using companies that participate in Markit’s world-wide PMI surveys shows that these higher prices are feeding through to factories, with the incidence of increased steel prices rising sharply to reach the highest since August 2008, just prior to the collapse of Lehmans.

Ends --

Chris Williamson, Chief Economist, Markit - Download here:

www.markit.com

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