Severstal head of strategy Mr Thomas Veraszto told CNBC that slumping iron prices are set for a sharp rise in the medium-to-long term. Iron ore prices have fallen sharply since the start of August, in part due to the weakening economic picture in China. Prices currently range between USD 80 and USD 90 per metric ton, their lowest level since December 2009. However, Mr Veraszto, forecasts a strong recovery in prices over the longer-term to USD 107 per metric ton or higher.

Despite disappointing Chinese manufacturing data for August from both the government and HSBC, Mr Veraszto said markets were underestimating the country’s future demand for steel, which he forecast would grow at 4 to 5% over the next few years.

He said that “I still think there is ample room for growth in steel consumption in China. If you look at the cumulative steel per capita that exists in China today, it is running at around 25 to 30% of what we have in the US and Europe, so there is still a lot of room to grow.”

He added that “Although there may be cyclical problems, I think the long-term story of continuing urbanization and investment into infrastructure is still intact.”

Mr Versazto’s bullish view on China was supported by Mr Jeremy Friesen, commodity strategist at Societe Generale, who spoke to CNBC earlier on Monday.

Mr Friesen said that “In China, there’s a big pipeline of projects. It will just take Beijing to slowly ease conditions, which they will do sometime in the fourth quarter or before the fourth quarter, and we should see a turn that will help base metals, and should help iron ore as well.”