ASEAN steel output rises sharply

ASEAN crude steel production on upward trend.

Bangkok, Thailand April 12, 2019 – Southeast Asia is one of the fastest-growing steel production regions in the world, Duferco Asia managing director Subhendu Bose, told delegates at Kallanish Asia Steel Markets conference in Ho Chi Minh City this week.

ASEAN region crude steel production has grown by 60% or by over 11 million tonnes/year over the last three years, to 31 million tonnes in 2018. When several major projects come onstream, regional crude steel production may reach up to 50mt within the next two years. Bose identified Vietnam and Indonesia with respective additional capacities of 7.5m t/y and 3.5m t/y as the main growth areas.

Most of the additional production is focused on long products, specifically rebar with 18- 20m t/y and by 2020/21, the additional capacity will increase regional rebar production to above 23m t/y. The region’s fastest growing product is hot rolled coil, with capacity exceeding 9mt in 2018 due to new output in Vietnam and by 2020-21, capacity additions will increase the regional HRC production to above 13m t/y.

Following the increase in regional steel production, steel export volumes from ASEAN countries have grown very rapidly from 9.8mt in 2015 to 15.6mt in 2018. Export volumes within ASEAN (intra-ASEAN trades) have increased, but not as much as export volumes to outside of the region. Intra-ASEAN trade volumes have moved up by 30% from 4.1m t/y to 6m t/y whereas ASEAN exports to outside the region have jumped up by a massive 74%, from 5.7m t/y to 9.6m t/y.

Indonesia and Vietnam are driving the increase in export volumes. Exports from Indonesia rose from 1.6mt in 2016 to 3.8mt in 2018 and for Vietnam, from 3.2mt to 6.5mt.

Bose said that China, Japan, South Korea, and Taiwan will remain the region's primary source for flat products, at least in the medium term. “However, these countries will need to compete with the new capacities in Vietnam, Indonesia and, possibly, other countries of the region,” he said. As imports from Japan, South Korea and Taiwan tend to target the value-added sectors, Chinese flats could face more competition with the new production from ASEAN, he added. government’s emphasis on infrastructure projects to expand cities and its open policy to welcome foreign investors will continue to drive steel demand growth in the future.