ASEAN is a large importer of finished and semi-finished steel products. In particular, the region imported up to 9.6 million tonnes of semi-finished steel in 2010, accounting for 33% of the region’s total semi-finished steel demand. The region also imported 9 million tonnes of hot rolled coil steel (HRC) in 2010, more than half of its total HRC demand for the year. Imports of cold rolled coil and coated sheet also constituted more than half of the total demand in 2010. Major sources of imports were Japan, Korea and Taiwan. On the other hand, imports of long product were not significant as the region is self-sufficient in long steel production. Most of the long products used in the region are for the construction sector.
The main reason for the huge import volume, especially for flat steel product, is the fact that the regional steel producers do not have the capacity to produce certain grades of steel, particularly those at the high end. According to Dr. Chayodom Sabhasri of the Chulalongkorn Univeristy Thailand, there are many steel product groups that steel producers in the region do not produce or are capable of producing only limited grades or very small amount.
In his presentation on “ASEAN Economic Community (AEC) and Thailand Steel Industry” at the 2011 SEAISI Economic, Environmental and Safety Seminar, he identified them as high quality carbon and alloyed bar and wire rod, hot rolled coil for subsequent production into cold rolled coil, galvanized steel sheet for automotive and electrical appliances sectors, certain grades of carbon and alloyed hot rolled coils which are for direct use in the automotive and electrical appliances sectors, hot rolled pickled and oiled sheet and hot rolled stainless steel sheet.
Despite the global economic turmoil and the natural disaster in some countries, the steel industry in the region continues to grow. Steel consumption in the region picked up strongly after the economic slowdown in 2008 and registered a robust growth of 17% y-o-y in 2010.
Nevertheless, steel industry in the region cannot continue its growing momentum by relying on imports of steel from outside of the region. With the establishment of the ASEAN Economic Community in 2015, the region needs to change its strategies by improving its competitiveness. In the CEO panel discussion at the same seminar, it was agreed that the region’s steel producers should go into the production of high grade steel and fulfill the missing gap in the supply chain. While consolidation is an important strategy, the issue is how to achieve this.
Dr. Chayodom also suggested in his presentation that the Thai steel industry should establish ‘an immunity’ for domestic producers. The government should not only allow imports but also lower barriers as well as facilitate intra- ASEAN trade. This would encourage regional investment and establishment of production and trade networks among the ASEAN members. Last but not least, the government should also offers support and assistance to strengthen producers who produce import substitution products so that they could lower their costs and improve their production processes.