London, 18 January 2011

The MEPS – World Average Carbon Steel Price is forecast to exceed $US 1000 per tonne in the third quarter, according to preliminary analysis by the company. This figure compares with an annual average in 2010 of $US 733 per tonne and an ‘all-time’ high in 2008 of $US 1,160.

The sharp rise in steel prices will be driven initially by higher input costs for the mills. The Australian floods are limiting supplies of coking coal – pushing spot prices even higher. Iron ore prices are steadily rising due to restricted availability from India. Scrap costs continue to escalate. These are vital ingredients of steelmaking.

Many steel buyers will be lifting their order volumes in an effort to purchase ahead of the impending price hikes. This should enable the mills to lift their margins on sales. All these factors are likely to push the MEPS World Average Carbon Steel Price through the $US 1000 per tonne barrier once again.

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