ASEAN Steel industry - before and after impact of global economic downturn

Posted on 03 February 2009
 

Source: SEAISI
The ASEAN steel industry as a whole registered impressive growth in the first half of 2008.

Apparent steel consumption in ASEAN in the first half of 2008 was estimated to reach 25.2 million tonnes, up by 10.2% from the same period in 2007. The region's steel output for the same period was estimated at 15.2 million tonnes, an increase of 13% y-o-y. Import rose by 13% to 15.6 million tonnes, while export jumped significantly by 28% to 5.6 million tonnes.

For the first six months of 2008, Indonesia's steel consumption registered the highest growth rate (among the 6 countries) of 24% to 5.5 million tonnes. Production rose by 13% to 3.6 million tonnes. In the same period, Indonesia's trade figures for steel products also increased substantially. Import jumped by 58% to 2.86 million tonnes and export registered a 64% increase to nearly a million tonnes. Thailand's steel consumption also registered a significant growth rate of 13.6% to 7.45 million tonnes in the first half of 2008. Thailand's long steel production registered a huge increase of 23% y-o-y to 2.56 million tonnes, while flat steel production of 2.06 million tonnes represented a moderate surge of 2% y-o-y. Vietnam's producers of long products also enjoyed significant output growth of 10% to 2.2 million tonnes. In the year, the country also started its production of hot rolled coil which registered 150,000 tonnes for the first six month period. Import soared dramatically by 35% to nearly 4 million tonnes, of which more than 80% comprised the import of flat steel product. Export of long product doubled in volume to 196,000 tonnes while flat product export increased more than ten folds to 0.8 million tonnes. Apparent steel consumption in Vietnam was estimated to reach 5.3 million tonnes in the first half of 2008, an increase of 10.5% y-o-y.

Malaysia's steel consumption was estimated to have registered a moderate increase of 5-6% y-o-y to 4 million tonnes. Singapore and Philippines, on the other hand, seemed to be the only two countries in the region that experienced a negative growth rate in the first half of 2008. Philippines' steel consumption was estimated to have dropped by 9.5% to 1.57 million tonnes. Production increased by 20% y-o-y to 1 million tonnes. However, import dropped by significantly by 34% to 0.66 million tonnes. Singapore's steel consumption registered a decrease of 12% to 1.3 million tonnes. While the country's only steel manufacturer, NatSteel Holdings, enjoyed a 19% increase in production to 380,000 tonnes, import showed a significant drop of 12% to 1.8 million tonnes when compared to the same period of 2007.  

The negative impact of the global economic downturn started to kick in in the second half of 2008 and many steel companies around the world initiated production cuts in response to the sharp fall in steel prices. Many steel producers in ASEAN countries also resorted to similar measures. For example, Krakatau Steel of Indonesia announced that it would halt the production of four of its five EAF for two months starting from December 2008. Meanwhile, Gunun Garuda Group, also of Indonesia, has cut production of beam by 60-70%. Perwaja and Kinsteel from Malaysia have cut up to 35% of steel production since September 2008. According to Mr. Payungsak Chartsutipol, Presedent of Thailand Iron and Steel Industry Club, some of the steel producers in Thailand stopped producing while some of them are running at only 30-40% of their capacity in response to slowing orders. At the same time, several countries in the region have also undertaken measures to encourage export growth in response to slowing domestic demand and to support domestic producers. Indonesia is now investigating complaints involving the dumping of hot rolled plate from Taiwan, China and Malaysia. Malaysia's steel producers have proposed to the government to review its tariff structure for steel products. Vietnam, after revising export duties for billet and import duties for CRC (see SEAISI newsletter, December 2008 issue) has recently increased import duties for billet from 2% to 5% and long products (bar, wire rod, small to medium section) from 8% to 12%, effective in December 21, 2008.

Despite the slowdown in the second half of 2008, SEAISI estimated that the apparent steel consumption in the ASEAN – 6 increased by 4-5% y-o-y to 45-46 million tonnes. This is because of the high consumption registered in the first six months of the year.


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