As the biggest steelmaker in China, Baosteel is at present implementing two crucial strategic plans. The one is to expand its output scale, and the other one is to upgrade its steel product structure. The former mainly depends on M&As and investments in new projects, while the latter involves the production of more high-end products and the termination of the production of some low-end products, such as rebars.
Currently, the Nantong-based Baosteel Nantong Iron and Steel Company (Nantong Baosteel) and Bayi Steel are the only two subsidiaries within the Baosteel Group still engaged in the manufacture of rebar products. Just two years ago, another Baosteel subsidiary called "Shanggang No.1 Factory" located in Shanghai was the major rebar manufacturing center within Baosteel. However, everything changed when Baosteel clarified its long-range development strategies. The Shanggang No.1 Factory has now been transformed into Baosteel's hot-rolled stainless steel base.
As one of Baosteel's main rebar manufacturing centers, Nantong Baosteel's rebar output is at the most about 600,000 metric tons a year. It mainly focuses on the production of rebars in line with Chinese steel standards.
In recent years, under the influence of Baosteel's renown and the increasing demand for rebar products both in the local and overseas markets, although Nantong Baosteel is not a large-scale rebar maker in Chinese terms the rebar products of Nantong Baosteel are welcomed by the market. The ex-factory price of Nantong Baosteel always stays at the same level as the prices of the biggest rebar makers such as Shagang located in Jiangsu Province.
It is known that Baosteel's most profitable steel product for the time being is its steel pipe series. In this context, Nantong Baosteel is planned to be turned into a manufacturing base for pipe billets within the Baosteel Group in the future. In fact, Nantong Baosteel now prefers to produce and sell billets for rebar production rather than producing and selling actual rebars; this is because the current market prices of rebars and billets are very close, whereas the cost of making billets is lower than that of rebar production.
Since rebars are not on the list of Baosteel's strategic products, it appears inevitable that Baosteel will eventually drop rebar production. Following the example of Shanggang No.1 Factory, Nantong Baosteel is to cease its rebar production activity within three years.
Xinjiang-based Bayi Steel is a newly-acquired subsidiary of Baosteel with a long history of producing rebars. Before 2002, its major products were construction steels, including rebars. Due to the intervention of Baosteel and backed by technological upgrading, CR, HDG, pre-painted and other high-end products are claiming a greater share of Bayi Steel's output. Although due to its position as a big steelmaker in northwestern China, Bayi Steel has to produce rebar products to meet the demand of the regional market, as in the case of Nantong Baosteel and for similar reasons the rebar output of Bayi Steel is also expected to decline in the future.