Construction Industry: The Major Steel Consuming Sector in ASEAN

Posted on 04 September 2012
 

Source: SEAISI
Construction industry is the largest steel consuming sector in ASEAN, contributing to about 63% of total steel consumption in the region. Within the region, Thailand’s construction sector is the largest steel consuming sector, with a total volume of 7.86 million tonnes of steel used in the sector in 2011. The severe floods that hit the country in 2011 turned out to be a positive factor in boosting up construction activities in the country. There is now greater demand for the construction of flood protection system in the residential areas. Additionally, many people are also moving out from flood-risk areas, leading to increased demand for new houses.

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Indonesia’s construction sector consumed the second highest volume of steel in the region. A total of 6.68 million tonnes of steel was used in the sector in 2011. From SEAISI survey, it is estimated that 61% of steel consumption in the country comes from the construction sector. As a big country, Indonesia’s construction sector has expanded significantly over the years. According to PT Semen Gresik, the largest cement producing company in Indonesia, cement production in the country has risen by an average of 7.2% from 2000 to 2011.

Malaysia’s construction sector consumed about 6 million tonnes of steel in 2011. According to the Department of Statistics, Malaysia’s cement production, the main indicator for the country’s construction activity, has expanded gradually with an average compound growth rate of 2.6% for the period 2008-2011. The government has launched several infrastructure projects to boost up economy in the country. As a result, it is expected that the construction industry in the country will have an annual growth rate of 3. 7% from 2011 to 2015.

About 60% of total steel consumption in Vietnam comes from the construction sector. In 2011, a total of 5.8 million tonnes of steel were used by the sector. After witnessing moderate growth rates over the last few years, Vietnam’s construction sector suffered a negative growth rate in 2011. However, many quarters believe that the decline is close to bottoming out. Growing foreign investment in the country will help to boost up the real estate sector in the future.

Philippines’ construction sector remained buoyant over the last few years, benefiting from the supporting policies instituted by the government to boost up the industry. Interest rates on loans have been dropping since 2006 and the expansion of the tourism industry in the country is a major catalyst. Currently, only 300,000 new houses are being built per annum while the population is growing at around 2% per annum. As a result, there will be growing strong demand for new houses. In the meantime, hotels and other hospitality sector have also been expanding to prepare for the growing tourism industry. Therefore, it is expected that the construction sector in the country will continue to grow in the years ahead.

Singapore, with the smallest volume of steel consumption in the region, enjoyed a healthy growth rate of 4.4% in its construction sector in 2011. A total of 2.9 million tonnes or 75% of total steel used in 2011 was consumed in the construction sector. Although Singapore is a small country,  it has continued to develop construction technology to improve efficiency in construction methods in the country.

The Building & Construction Authority (BCA) of Singapore, in cooperation with many local construction companies, is promoting construction technology in order to reduce the cost of construction and improve productivity with the funding coming from BCA. For example, NatSteel Holdings, the sole construction steel producer in the country, has developed the so-called ‘Precaging technology’, a pre-assembled reinforcement cage which can reduce material wastage and improve on-site safety. The technology has been applied in the construction of the Marina Bay Financial Center Tower 2 for which the eventual benefits gained from the precages were doubled that of the cost in installing them.


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