General Steel Holdings, Inc., one of China’s leading non-state-owned producers of steel products and aggregators of domestic steel, announced its plan to initiate construction on a state-of-the-art, 900,000 tonne seismic-grade rebar production line at its principal manufacturing facility, Longmen Joint Venture, located in Hancheng City, Shaanxi Province, China. The production line incorporates cutting-edge technology that is expected to reduce rebar production costs by approximately RMB100 per tonne.

"Through the implementation of new production lines that utilize cutting-edge technology, we are reducing energy consumption and production costs, while improving the quality of rebar we produce. This is consistent with our broader efficiency improvement programs and efforts to optimize our capacity utilization capabilities at Longmen JV," said General Steel’s Chairman and Chief Executive Officer Henry Yu. "The launch of this new production line better positions our Company at the high-end of the steel value chain where we can be a standard-bearer for high-quality construction steel products. At the same time, this is an investment in our growth that enables us to meet increasing customer demand, generate sustainable profitability and improve shareholder value."

In 2011, General Steel completed the installation and testing of a one million ton high-speed wire production line and a 1.2 million ton rebar production line, both of which were transferred to the Longmen facility from the Company’s Maoming facility to leverage economies of scale. As part of the Company’s growth strategy, Longmen JV plans to continue increasing its annual rebar rolling capacity through the installation of additional rebar production lines at its facility. By rolling rebar at the same facility in which steel billet is produced, the Company can eliminate the process of cooling, transporting and re-heating of the steel billet for processing at another location, substantially reducing the costs.

The new production line utilizes Thermo Mechanical Control Process (TMCP) technology, which enables ultra fine-grain and uniform rebar production that results in steel products with greater strength and durability. Steel that is manufactured using TMCP production is typically less susceptible to cold cracking, is better able to withstand extra high-heat input welding, and meets industry standards for seismic-grade rebar.

"The market for seismic rebar has exploded in recent years following the 2008 Wenchuan Earthquake in the eastern Sichuan province of China. This disaster revealed that enforcement of seismic building codes in rural areas of China was lax. Seismic activities in China are typically high frequency, high magnitude, wide distribution and shallow hypocenter, which make China one of the world’s most earthquake-hit countries, and the seismic activities in China are chiefly concentrated in the west region, the primary end market for Longmen JV’s rebar and other steel products," Mr. Yu added, "Extensive construction activities in the west region following the recent earthquake in China have increased the use of seismic-grade rebar, which we expect to drive significant demand for our seismic-grade rebar in next few years."

In accordance with China’s 12th Five-Year Plan for National, Social and Economic Development, the Chinese government issued a national regulation that requires seismic-grade rebar for new housing and infrastructure construction. To promote this upgrade, by the end of 2015, rebar products with greater strength and durability will be awarded 80% of total rebar production volume in China.