The long products market in the first quarter of 2015 will be healthy, following the “rebalancing” at new price levels of major commodities that impact steel. Currency trade wars are commencing due to slowing Chinese growth, and commodities are consequently taking a beating, according to the latest report from the International Rebar Producers and Exporters Association (Irepas) monitored by Kallanish.

Production cuts and improved global longs demand is easing the oversupply seen in the market from September to the end of November, which put downward pressure on prices and delayed or even fragmented purchasing, the association says. Buying could be moved forward after the longs price downtrend stopped in recent days, but the upcoming holidays should bring a pause in activity and some market stability for a few weeks.

Central and northern Europe are bright spots for demand, while the US market – stable during the downtrend – remains strong, but there is pressure on prices to decrease. Countries dependent on raw materials income, such as Brazil, Chile and Algeria, are seeing a slowdown in activity.

Competition is still “extremely strong”, and new adjusted currency values and prices of scrap and iron ore are continuously changing market player’s competitiveness. Turkish suppliers are now withdrawing from their intense competition to attract orders against CIS and Chinese suppliers. Russian scrap and billet exporters will be competitive following the collapse of the rouble. Lower oil prices are keeping freight costs down, thus facilitating business.

A “new era” has started in which China is a major supplier, and two different market groups are seen: China-dominated markets and protected markets, Irepas says.

After 13 weeks of price declines, Turkey’s scrap market has levelled off for now due to supply chain tightness. “Many in the scrap community have taken a step back so as to not get damaged in the rout,” Irepas observes. “This has been especially noticeable on the industrial level where competition is most fierce. No supplier wants to be sitting with expensive material in a falling market.”

The overall outlook for scrap remains bearish, but rebounds could be quick when sentiment improves as lead times are short.