Since 2000, exporters of billet have mostly been producers in newly-emerging economies. During 2006, the last full year for which accurate figures are available, the most significant exporters were Ukraine, Russia, China and Brazil. Five of the ten largest importers by country were in Asia; namely Taiwan, Vietnam, Thailand, South Korea and China. With the exception of China, similar demand will have continued during 2007 and is likely to be maintained throughout 2008.

China, however, has changed significantly and in so doing, it has wrought changes in global trade flow. Until 2004, the country was a heavy net importer but, after a huge increase in local production, it achieved a balance between import and export volumes in 2005. Many of these new exports were semi-finished steel, chiefly billet, which enjoyed an export rebate, was mostly shipped to rerolling mills within Asia.

During 2006, Chinese exports of billet to Asian customers continued to grow, despite changes in policy which briefly saw exports of semi-finished material discouraged by the removal of export rebates. Other exporters of billet, such as Russia and Turkey, saw their sales decrease as Chinese supply replaced their product.

Export volumes of billet peaked in October 2006. But the following month, shipments dropped dramatically after the authorities imposed a 10 per cent export duty. There was a further surge in exports from China between February and July 2007, but another export duty increase, from 10-15 per cent, reduced shipments again.

Meanwhile, demand was beginning to pick up for construction materials in other regions, especially the Middle East, and the other billet producers were finding new markets closer to home. In January 2008, another 10 per cent export tax on billets from China came into effect, which, combined with increasing domestic demand, has almost completely stopped the flow of semis.

As other suppliers have found new markets, or chosen to process billet themselves and sell the rebar finished product, there is a substantial shortfall of traded billet at this time. Prices of billet have been rising steadily since the end of last year and are likely to remain high while China is out of the export market.

Rebar production in Asia

Global rebar production grew from 100 million tonnes in 2000 to 170 million tonnes in 2006. China accounted for more than 70 per cent of that growth, rising from 28 to 80 million tonnes in 2006, while other Asian countries only increased output from 28 to 32 million tonnes, an annual growth rate of just 2 per cent.

Some countries in Asia aim to be self-sufficient in rebar and restrict or ban imports, while others, such as Singapore, import only high-quality or high-performance rebar that will comply with demanding construction codes.

Although Chinese suppliers may consider developing sales of rebar to Asia as they seek to improve the value of their exports, they are already finding lucrative sales in other regions. The strength of demand from the construction industry for these products is almost certain to continue, thanks to sustained economic growth in the Asian region. Thus it is likely that supply will continue to be short for at least the next four to five months.

Mark Wiggett
Steel eRingsider
Summer 2008