Posted on 30 Sep 2025
The ASEAN steel industry continues to face overcapacity crisis, with production capacity projected to nearly double to 169 million tonnes by 2035, far outstripping regional demand, South East Asia Iron & Steel Institute (SEAISI)'s chairman, Lim Hong Thye, said at an event attended by Kallanish.
"This expansion vastly outpaces ASEAN steel demand growth and threatens industrial sustainability," Lim says in a special address at ASEAN Policymakers Conference on Steel & 2025 ASEAN Iron and Steel Forum in Kuala Lumpur, Malaysia.
According to him, regional steel capacity currently which stands at 84.6mt, is forecasted to reach 169mt by 2035. This expansion is driven by announced investments of 57.7mt in new blast furnaces (BFs) and 36.8mt in electric arc furnaces (EAFs), excluding numerous additional induction furnace investments.
As this unprecedented growth threatens industrial sustainability, he urges policy makers to enact measures to manage investment inflow and regulate new capacity development, emphasising that achieving and maintaining capacity utilisation at or above 80% is essential for the survival and competitiveness of the ASEAN steel industry.
According to Lim, ASEAN demand surged to a new high of 81.2mt last year, a 7.9% increase that surpassed pre-pandemic consumption levels, signalling market certainty and improved trade prospects.
"However, this robust demand coexists with significant structural challenges. Import penetration in ASEAN steel products remained 65% last year, ranking among the highest globally," he says.
This heavy import reliance and intense competition is compounded by persistent overcapacity, leaving regional capacity utilisation critically low and under the sustainable benchmark of 80%, thereby undermining long-term operational viability.
The region's stability is also further jeopardised by global trade disruption and surging Chinese exports, he adds. While the US-imposed tariffs have compelled a re-negotiation of global trade flows, which is expected to position ASEAN as a beneficiary of export diversification, this also exposes the local market to increased import competition.
This pressure is acute given China's weakened domestic demand, which has fuelled a record high export volume of 113mt in 2024, and is projected to rise to 127mt this year.
Lim notes ASEAN absorbed over 30% of these exports last year, creating significant competition that risks undermining the regional industrial base. Therefore, he called on policy makers to remain resilient and provide proper support to local producers, countering adverse trade practices.
Source:Kallanish
