Chinese rebar extends presence in Russian market

The growing construction sector in Russia has made it possible for Chinese steel producers to increase their presence in the Russian domestic market. In 2006, the increase in the exports of steel products from China to Russia became very noticeable. According to the statistics, in 2006 Chinese steel exports to Russia totaled $230 million, an increase of 2.7 times compared to 2005. Chinese exports are especially present in Russia's Siberia and Far East regions. Geographical proximity, the relatively low freight rates from North China to the Russian regions in question, as well as the inability of the local producers to satisfy the market demand, have all contributed to opening up room for Chinese exporters. The last point mentioned above is especially true as regards rebar exports. The growing construction sector in Russia and the presence of only one big producer of rebar in Russia's Siberia and Far East regions – i.e., ZapSib, has made Chinese rebar exports more than welcome in the region. Market players report that the stocks of traders in the Siberia and Far East region are currently full of Chinese-origin rebar, for which there is a great demand in the market. One of the main reasons for such a successful expansion is the very competitive price of Chinese rebar. SteelOrbis has been informed that Chinese-origin rebar is currently being offered to Russia in the range of $425-435/mt FOB China. With the freight rate standing at about $10-15/mt for North China to Russia's Siberia/Far East, this price makes Chinese rebar very competitive in the Russian domestic market. In comparison, local traders are offering ZapSib rebar to the regions in question at Ruble 17,200-18,100/mt ($648-682), excluding VAT.