China's Vanadium Producers Evaluate Implications of New Rebar Standard

Chinese vanadium market participants have articulated a range of perspectives concerning the potential implications of a newly-approved mandatory standard for steel reinforcement bar (rebar), a principal downstream product. On June 25, China's State Administration for Market Regulation and Standardization Administration sanctioned the mandatory standard GB 1499.2 for steel rebar, slated to become effective on September 25. This standard was initially promulgated in 2018 as a recommended guideline.

The revised regulation stipulates that producers of rebar with vanadium content below the mandated threshold must augment their vanadium usage to comply with the standard. A 2023 survey by China's Central Iron and Steel Research Institute (CISRI) indicates that the production of non-compliant steel rebar accounts for approximately 23% of the total output.

This standard also includes the higher grade HRB600 rebar, which is anticipated to necessitate 4-5 times the vanadium content compared to HRB400, notwithstanding China's predominant production of HRB400E.

A vanadium alloy producer based in Chengde has minimized the potential for substantial demand growth following the implementation of the new standard, citing the increased adoption of alternative materials by numerous steel mills, such as high phosphate ferro-niobium, vanadium-containing pig iron, and ferro-titanium.

An executive from a leading producer in Sichuan province foresees that enhancements in the steel industry will eventually elevate vanadium demand, albeit not significantly. The rationale is that incorporating more vanadium into steel enhances its strength, thereby reducing the overall quantity of steel required in construction and, consequently, the consumption of steel rebar. Industry estimates suggest that the average vanadium consumption per tonne is 0.3 kg for HRB400 and 0.6 kg for HRB500.

In contrast, a vanadium alloy smelter in Shaanxi is optimistic about the new standard driving short-term demand growth. The smelter anticipates that prices will escalate in July as some steel mills may increase their purchases in response to the new standard. This smelter had suspended production in mid-June due to narrowing profit margins.

A source from a Chengdu-based alloy producer predicts that the vanadium market will experience a downturn during July and August due to diminished demand from the steel industry. However, the demand for vanadium is expected to recover in September with the enforcement of the new standard.

Steel mills reduced their production in mid-June due to depressed prices resulting from sluggish purchasing activity and a pessimistic demand outlook for the summer, as high temperatures and increased rainfall have impeded outdoor activities.

Meanwhile, most other market participants are adopting a wait-and-see approach as they assess the ramifications of the new rebar standard.