Short told MEED’s Middle East Steel 2008 conference in Dubai on 13 October that about 2 million tonnes of steel bought at a price of about $1,500 a tonne was in stock or being transported to the UAE.

“There is about 1.2-1.4 million tonnes in the market, 250,000 tonnes in the port and another 250,000 tonnes on its way,” he said.

“This was bought at or around the peak prices we saw in the second quarter. So we have probably got in excess of $1bn of losses in steel that will soon be monetised.”

“This is a steel problem,” added Short. “It is a big problem for the banks as well. The system will face some problems in the next few months.”