Construction sector and the ASEAN steel industry

Posted on 19 January 2016

Source: SEAISI
ASEAN steel demand continued to increase significantly, by an average growth rate of 9.6% per annum from 2009 to 2014, to 65.9 million tonnes in 2014. This was mainly due to strong domestic demand, especially in construction sector.

Construction is the major steel consuming sector in ASEAN, accounting for some 73% of total steel demand in the region.


Major steel usage for the construction sector is long steel. However, some countries are developing construction method to use more flat steel such as in structural steel building. In Malaysia and Thailand, demand for flat steel for construction is higher than those for long steel while demand for long steel in construction sector in other countries in the region is significantly higher.

The expansion of construction sector is mainly driven by mega projects initiated by the government. Indonesia's construction sector, in particular, started to grow rapidly since 2010. The sector is expected to continue to grow more significantly due to government's mega projects to link up many islands in the country.


In Malaysia, demand for residential houses is somewhat stagnant. However, government's policy for urbanization has boosted demand for construction. Moreover, the country has good infrastructure, i.e., road, highway among cities, that has made the urbanization process in the country easier and faster.

Construction in Philippines picked up robustly, starting from 2012. This is mainly driven by the projects from the private sector. New business area expansion has seen rapid growth in recent years, especially the construction of high-rise buildings, such as offices, hotels, shopping malls, apartments etc. Apart from domestic construction, some steel fabricators in the country also produce steel structure or parts of construction building for export.

Thailand's construction sector continued to grow despite the economic slowdown. Construction of condominiums increased significantly to replace needs for new houses in big cities. This is evidenced by the significant growth rate for developer built apartments and condominiums of 16.3% from 2000 to 2007 and the growth rate remained at 16.8% from 2008 to 2014 while the growth rate of developer built houses was reduced from 21.6% from 2000 to 2007 to 4.1% from 2008 and 2014.

Vietnam's economy is expanding rapidly. However, there is still insufficient government mega projects to promote infrastructure development. Demand for residential houses is small, while there is more demand for high-rise buildings for apartments and hotels and construction for factories and warehouses. Nevertheless, residential construction is not growing rapidly in Vietnam, when compared to other countries in ASEAN. The growth of construction sector in the country is partly driven by the production of steel structure for export.

All in all, steel demand for construction sector is still promising in many countries in the region. However, steel manufacturers are not able to enjoy the benefits of value add from steel production through the processing of steel to construction sector. Rebar price, for example, increases six times from steel factories to end users.

Steel manufacturers tend to produce large quantity of steel and only for limited sizes. In the meantime, end users require steel in small quantity for each order and for various shapes and sizes. Therefore, there is a need for steel distribution to go through steel service centers, fabricators, stockists, traders etc. These service centers undertake further processes to fabricate steel into different designs or shapes to meet demand.


«  Back

Copyright © 2016 SEASI Site. All Rights Reserved.