London, 14 September 2010

"Prices will rise at start of Q4, but may fall back if demand eases towards year-end": In this month's issue I look at the likely change in market conditions in the next three months if demand strengthens after the holiday period, and how long this pick-up might last, noting there are still concerns about potential over-production.

There is a fall in quarterly contract iron ore cost prices in Q4, and spot prices are currently slipping. Demand should improve for flat products in most markets, and I examine whether price increases will stick if output is not cut back. I anticipate that Asian prices will be firmer in Q4. In US and Europe, longs prices will probably fall unless scrap keeps rising.

I also look at July's production figures that showed global output to have dropped by 3.5 million tonnes. European output fell significantly. The key issue is whether producers in Europe and US can achieve higher price levels and maintain them until the end of the fourth quarter, or whether an excess of production will lead to spot price falls.

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