ASEAN-6 Steel Scrap Demand and Supply

Posted on 17 March 2021

Most Steel Producers in ASEAN-6 region are using Electric Arc Furnace (EAF) technology. A total of 28-29 million tonnes of semi-finished steel production per annum requires at least 30 million tonnes of scrap to be fed into the production line. Within the six countries in ASEAN, only Indonesia, Malaysia and Vietnam have iron-making facilities, which could supply up to 8-10 million tonnes of iron products into the steel making. 

Out of the 30+ million tonnes of scrap demand for steel-making facility in the region, around 70% of which is domestically supplied while another 30% or one-third of the demand is served by import. 

Indonesia’s scrap demand was 8.4 million tonnes in 2019, an increase of around 2 million tonnes from 2018. The volume remained stagnant, with an increase of only 2% in the first half of 2020. Around 70% of scrap demand in Indonesia was supplied domestically while 30% of which came from imports. The largest source of carbon scrap import was Australia (21% of total), followed by import from China (through Hong Kong, 19%), USA (11%), Singapore (11%) and Malaysia (8%).

Scrap demand in Malaysia dropped 10% y-o-y to 3.2 million tonnes in 2019. However, the volume skyrocketed by 56% y-o-y in the first half of 2020. The hike was due to the increase in steel-making capacity. Malaysia’s steel industry is able to get domestic supply of scrap, which accounted for 85-90% of total demand. 70% of total carbon scrap import was from Japan, followed by import from USA (10.5%) and Singapore (5.3%). 

Scrap demand in Philippines increased significantly, at 30% y-o-y to 2.2 million tonnes in 2019. However, the demand dropped by half in the first half of 2020. Philippines is one of the two major countries in the region that is a main exporter for scrap. Scrap import was as low as 5,000 tonnes a year while export was as high as 500,000 tonnes a year. Major scrap markets were Pakistan (35% of total scrap export), South Korea (14.5%), Taiwan (13.6%) and India (10.6%).

Singapore’s demand for scrap was not significant as there is only one steel-making company in the country and the production volume averages around 500,000-700,000 tonnes per annum, depending on the market situation. Apart from Philippines, Singapore is also another country that is a main scrap exporter in the ASEAN-6 region. Scrap import in Singapore was 80,000 tonnes in 2019. Scrap export registered 714,531 tonnes in 2019 and the volume in the first half of 2020 dropped significantly, by 37% y-o-y. This could be the slowdown in steel production in many countries due to COVID-19 outbreak. Major destinations were Indonesia (32% of total scrap export), India (23%), Vietnam (16%), Malaysia (12%) and Pakistan (6%).

Semi-finished steel production in Thailand averaged 4-6 million tonnes a year and all of the production is from scrap-based with EAF facility. However, due to the continued economic slowdown in the country, semi-finished steel production dropped significantly to 4.2 million tonnes in 2019. As a result, scrap demand declined by 34% y-o-y to 4.6 million tonnes in the same year. The volume continued to contract by 4% y-o-y to 2.2 million tonnes in the first half of 2020 due to the impact of COVID-19.  Around 25% of total scrap demand in Thailand was from imports. Major sources were USA (38% of total scrap import), followed by import from Japan (16%), Australia (11%), Panama (6%) and Costa Rica (4.5%). Although Thailand is the net importer for scrap, the export saw a significant volume at around 400,000 tonnes per year. Major markets for Thai scrap were India (31.5% of total scrap export), South Korea (20%), Malaysia (13%), Indonesia (9%), Taiwan, Laos and Bangladesh (6% of total export each). 

Vietnam is the only country in ASEAN-6 that has significant iron-making production. Total iron-making production registered nearly 10 million tonnes in 2019. The volume continued to increase 37% y-o-y to 5.9 million tonnes in the first half of 2020. Total semi-finished steel production registered 17 million tonnes in 2019. 

Scrap demand used in steel-making facility registered 10 million tonnes in 2019, an increase of 8% y-o-y. The volume continued to increase at 12% y-o-y to 4.6 million tonnes in the first half of 2020. Half of the scrap demand was supplied domestically while another half came from imports. Major sources of scrap import were Japan (69% of total scrap import), USA (13%), Hong Kong (9%) and Australia (3%).

Source : SEAISI