December steel prices indicate that the market may have reached rock bottom in November.

The price of steel last month showed an increase for the first time since it plummeted in July.

Last week rebar was trading at US $560 per metric tonne up from $440 at the start of November.

The narrow rise is a strong indicator that prices may have reached their absolute low last month.

Steel prices have had a tumultuous ride this year, opening at $760 per metric tonne of rebar, before climbing to a summer high of $1540 in July, and subsequently falling to $440.

"Suspension or delay in the number of projects that were due in 2009 has affected demand in the future," Dubai Multi Commodities Centre executive director John Short told Construction Week. "There is too much steel in the physical supply chain."

Short added that the credit crunch was responsible for last months rise in prices.

"Supplies of credit are not available," he said. "Suppliers are unable to bring in low cost steel to even the chain out."

Last month Madar Steel director of business development Ashraf Kora said, "When the price was falling, the market reduced the quantity it was ordering in anticipation of the price falling further.

"Now the price has reached rock bottom and people are placing bigger orders knowing that the price is going to begin rising again."

Last month Aldar senior marketing manager Sami Eid urged the industry to take advantage of the comparative low prices.

"This is really the time when we can get the best deals on raw materials," he said. "We look at this crisis today in positive terms."

Analysts have repeatedly said that a slight construction slowdown is healthy for the industry. The current price is an indication that the market has leveled out as a result of the slowdown.