In 2006, the total apparent steel consumption in the six ASEAN member countries of SEAISI was 38 million tonnes. Compared to the figure of 39.3 million tonnes in 2005,steel consumption dropped by 3% in 2006. This was largely due to the negative consumption growth in Thailand and Indonesia.
For the year 2007, all the ASEAN-6 countries, except Thailand, are expected to report positive growth rate in steel consumption. As a result, total apparent steel consumption in ASEAN-6 is estimated to exceed 40 million tonnes in 2007 and reach a historical high.
Despite the possible fall out from the widely projected slowdown/ negative growth in the economy of US in 2008, the ASEAN-6 countries are not expected to be badly affected and will continue to see positive economic growth, albeit at a slower rate. The regional steel consumption is expected to also maintain its growth path and continue to expand in 2008.
According to a UBS forecast, Indonesia's GDP growth rate will be maintained at 6.2% in 2008, the same growth rate as in 2007. This is due mainly to the expected positive growth in export. With regards to steel consumption, preliminary estimates indicated that Indonesia has enjoyed a robust growth rate of around 18% in 2007. As a consequence, there was a surge in the import of many steel products in 2007. For example, import of section and bar increased significantly by at least two-fold from 2006. Import of hot rolled coil, cold rolled coil and coated sheet also nearly doubled that of the volume recorded in 2006. Meanwhile, export of major steel products such as section, wire rod and hot rolled coil registered negative growth rate when compared to 2006, possibly due to the strong domestic demand. Going forward, steel consumption is expected to continue to grow in 2008, albeit at a slower pace than 2007, but still a strong projected growth rate of 10%.
The outlook for Malaysia's economic growth has been positive. The Malaysian Institute of Economic Research (MIER) has revised upward its forecast for Malaysia's economic growth in 2007 to 6.1% from 5.7%. For 2008, MIER maintained Malaysia's GDP growth projection at 5.4%. Steel consumption is estimated to have increased at the rate of 5% in 2007 and is projected to grow further at a rate of 7% in 2008. Long product consumption will increase markedly. This is evidenced by the doubling in import volume registered in 2007. The import was mainly to meet the shortage of construction bar in the domestic market. While export volume of steel products from Malaysia doubled in 2007, the quantity was nevertheless not very significant. However, the trend indicated that export of steel products will continue to grow in the future.
Analysts have painted quite a positive picture of Philippines' economic performance in 2007 and outlook in 2008. The Philippines government has announced that it is confident of achieving its economic goal for 2008. This is evidenced by the pickup in private construction as well as the growth in investments in durable equipment. Thus, it is probable that the government spending on infrastructure could be sustained. Steel consumption, in fact, has started to pick up since 2005 and continued to increase in 2006. It is forecasted that steel consumption in Philippines will register a positive growth rate of 5% for both 2007 and 2008. It is also predicted that domestic producers will enjoy an increase in production volume for long product to serve the increasing demand in the construction sector. Demand for flat product is expected to increase as well with the bulk of the supply coming from import.
The 2007 fourth quarter GDP growth for Singapore is reported to have slowed down, with annualized adjusted growth falling to 3.2%. This is mainly due to the negative export growth. However, a few sectors are showing positive growth sign, fueled by tourism, construction and manufacturing investment commitments. Construction sector, in particular, is expected to continue to grow at an average rate of 10-15% each year. The boom in the construction of new apartment projects as well as MRT and integrated resorts are the key factors for the expansion of construction sector in the country. It is forecasted that Singapore's steel consumption will grow significantly by 15% in 2007 and a further 10% in 2008.
The recent quarterly GDP growth in Thailand has improved. This is due to government consumption and an increase in total investment. The 2007 GDP growth is expected to reach 4.6%. Macquarie predicts growth of 5.7% in 2008. With the peaceful conclusion of election and the formation of the new government, politics will no longer be a major issue for the country this year. In fact, the new government could launch a mid-year budget for the implementation of new projects this year. The acceleration in the implementation of mega-projects could be the main driver for economic growth as well as steel consumption in the coming year. It is estimated that steel consumption in 2007 has remained in the negative territory (-6%). However, the steel consumption pattern is expected to see an improvement with a 5% growth rate in 2008.
Vietnam's economy as well as steel consumption has experienced significant growth lately. GDP growth in 2007 is estimated at 8.5% and is projected to grow at 8.2% in 2008. According to Vietnam Steel Association, steel consumption in 2007 could registered a record high growth rate of 42% y-o-y. The momentum of growth is expected to continue into 2008, with projected growth rate of 15%.