NORTH AMERICAN LONG PRODUCTS PRICE FORECAST

The MEPS North American Average Rebar figure moved down slightly this month. This was in line with our expectations as demand remained strong. In the short term, rebar values are expected to hold up as scrap prices continue to show no signs of movement. New import licences suggest that volumes are set to rise over the next few months. This should put greater pressure on quarter four transaction figures. The first half of 2008 should then see a revival in prices as buying returns ahead of increased activity in the construction sector.

The MEPS North American Wire Rod value showed no change this month. The market continues to be firm as imports currently do not pose much threat. Wire Rod transaction figures have surpassed that of Rebar over the last few months, standing approximately $US30 per tonne above rebar prices. Wire rod numbers have risen more than 20% since the beginning of the year.

Overcapacity in the Chinese market for both products could result in increased volumes of imports into the North American market through the fourth quarter. This coupled with the traditional seasonal slowdown over the Winter months is expected to cause transaction values to fall around 5 per cent by the end of 2007.                                                                           26.07.2007