UK based MEPS said that “The world average carbon flat products price continued its inexorable rise in June. The increase was slightly above our expectations as the mood in Asia changed when it became clear that the iron ore settlement by mills in the region would be higher than originally anticipated.”

MEPS added that “Demand remains rather flat in the EU and US. However, the import threat continues to decline in both geographic areas. Consequently, supply is tight and substantial price increases are being imposed on customers on a monthly basis.”

MEPS said that “A similar picture has been noted in the long products sector, with price hikes of almost 55% since January. Rapidly rising scrap costs led to significantly higher selling values in the EU. A similar picture was recorded in the North American and Asian markets but the gains were slightly lower.”

For flat products MEPS said that “The higher than expected iron ore contract settlement in Asia has prompted us to upgrade our forecast for global steel prices over the next twelve months. We now envisage average transaction values in that region moving to figures above our previous projections. These rising values will almost certainly limit the potential for escalating export sales to the west in the short/medium term. As a result EU and US steel prices are likely to stay stronger for longer. Furthermore, with the expectation of steadily rising selling values in Asia and fewer exports to the industrialized nations the anticipated price correction in early 2009 is likely to be less severe.”

For long products MEPS said that “The substantial hike in the iron ore price settlement for Asian mills will push up steelmaking costs in China and other Asian countries. This, in turn, is likely to reinforce the high scrap prices in a global market which is already showing signs of shortfall. Long products selling values are, we believe, nearing their summit in this cycle in the EU and North America. Further gains are probable over the next six months in Asia. We now forecast the average world long products price at a slightly higher figure of USD 1070 per tonne into the final quarter. It is also now expected that the price correction around the turn of the year will be less dramatic. The price increase in the world average long products price through 2008 is now expected to be almost 63%.”