Posted on 30 Apr 2021
Southeast Asian steel demand is expected to rise this year amid uncertainties but faces the issue of gross oversupply.
Like the rest of the world, the region’s economic recovery to pre-Covid-19 levels hinges on the success of efforts to rein in the pandemic and investments to kick-start economies, South East Asia Iron & Steel Institute (SEAISI) secretary general Yeoh Wee Jin said at the recent Kallanish Asia Steel Markets 2021 conference.
Steel consumption across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam is forecast to reach 72-75 million tonnes in 2021. This SEAISI forecast is 2-6% higher than the estimated regional consumption of around 70mt in 2020. This estimate is 12.4% lower than regional steel consumption of 80mt in 2019. In 2019, Vietnamese steel consumption was 24mt, followed by Thailand’s 18mt, Indonesia’s 16mt, Philippines’ 10mt, Malaysia’s 9mt and Singapore’s 2mt.
Most of the regional steel consumption comes from the construction sector. Construction industry growth in 2020 was positive only for Vietnam and Thailand, with respective estimated growths of 6.8% and 2%. The other nations are estimated to have seen contractions of 3.3-33.7% in the construction sector.
The regional automotive industry, the second-largest steel-using sector, seems to be recovering. The region produced 2.85 million vehicles in 2020, down 31.6% from the previous year’s 4.2m vehicles. Last year, Thailand accounted for 50% of production, Indonesia for 24% and Malaysia 17%.
Gross steel oversupply continues to be an issue for the region. ASEAN exports rose by 23% to 19.1mt and imports dropped 18.2% to 41.9mt last year. Regional exports have been rising because steel production has grown from new mills, such as those in Indonesia, Malaysia and Vietnam.
Last year, around 90% of various regional steel investments, including Chinese investments, appear to have been delayed due to lack of funding and restrictions in migrant labour and expertise required in the plants’ construction.
Yeoh said that ASEAN will continue to attract steel investments because it is one of the fastest growing regions with large populations. China’s steel supply-side reform has resulted in Chinese steel capacities transferring to ASEAN. With further capacities expected to be cut in China, more Chinese steel investments are expected in the region, and they will include export strategies, even back to China. Hence, ASEAN steel demand and capacity will not be in balance, Yeoh noted.
Source:Kallanish
