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MB RESEARCH: The outlook for steel in East Asia
July 29, 2014 - 12:00 GMT
MBR estimates that, in 2020, finished steel consumption in East Asia and Southeast Asia (excluding China) will exceed 250 million tonnes.
Southeast Asia’s finished steel consumption
recovered rapidly after the 2009 global downturn,
and expanded at an average annual rate of 0.8% between
2008 and 2013. Steel consumption by this major emerging market
was propelled by an influx of direct foreign investment,
fuelled by cheap borrowing in the USA and Japan, and the
region’s growth rates exceeded those of Asia
Pacific’s mature economies.
Southeast Asia’s growth in consumption of flat
products exceeded that of long finished steel, suggesting it
was experiencing changes in structural demand as the industrial
production base strengthened in this emerging market.
Whereas steel consumption in Asia Pacific’s mature
economies is forecasted to grow at an average of just 1% per
year between 2014 and 2020, Southeast Asia’s
demand for finished steel is forecasted to see compound growth
of 2.5% between 2014 and 2020.
South Korea is expected to see the strongest growth in steel
demand among the wider region’s developed nations,
thanks to the rising take-up from the expanding shipbuilding
and automotive sectors.
The region’s emerging economies are expected to
show robust expansion, via urbanisation and infrastructure
expansion as well as by the gradual shift towards an
investment-driven economic model.
This will propel steel demand in the region’s
emerging economies to a compounded annual growth rate of
5.5% between 2014 and 2020.
Construction is the largest steel end-using sector, accounting
for about 75% of the take-up of long products and some 18% of
the consumption of flat steel products.
Ongoing urbanisation and the expansion of the industrial
production base in the region’s emerging markets
will, by 2020, see the construction sector’s
uptake of flat steel products to more than 20% of their uptake.
The Southeast Asian steel markets are short on domestic steel
supply despite the region’s own established steel
industries and considerable potential growth in demand.
Over the past few years, most of the demand has been served by
imports of material from China and the region’s
other mature steel producing countries.
Southeast Asian mills have suffered from unsustainably high
operating costs and a reliance on EAF steelmaking, which has
imposed raw material limitations on steelmakers.
This situation will change as a new large-scale BOF operation
is being set up in Indonesia by Krakatau, and new capacity is
also being planned in the region’s other
Improvements in regional supply will come through as
steelmakers from the mature markets of Japan, South Korea and
Taiwan bid to introduce new business practices by establishing
a foothold in the emerging markets to challenge Chinese
dominance over Southeast Asian steel supply.
If it is achieved, such a shift of the production base to the
end-markets will not only speed up the service to local buyers,
but will also allow the regional mills to secure a market
presence amid the intensifying protectionism seen in Southeast
Asia in response to the surging supply of cheap steel products
Although prone to chronic overcapacity and seeing deteriorating
margins on the looming indebtedness of the steel sector, China
has dominated finished steel trade in the region.
Southeast Asian destinations account for 40% of the
region’s total shipments of steel exports.
By way of comparison, intra-ASEAN finished steel trade stood at
just above 5% in 2013.
China’s export share has been further supported by
extensive exports of the boron-containing carbon steel
commoditised products, designed to circumvent Chinese export
duties, imposed since 2010. The introduction of a favourable
higher-added-value flat steel products tax framework has
dramatically altered China’s finished steel export
structure, with CRC, HDG and colour-coated steel dominating
Methodology and coverage
A new Metal Bulletin Research strategic forecast study
– Southeast Asian Steel and Raw Materials Industry has
just been published.
Its production is the result of six months of meticulous
research involving face-to-face or phone interviews with more
than 150 industry participants.
The study offers exclusive data on the region’s
emerging markets that steel associations under-report, insights
and perspectives into China and how this will affect Southeast
Asian steel prices, the most accurate and independent
assessment of current and future supply and demand and market
prices by steel product out to 2020 for each Southeast Asian
market, geo-political analysis of each market, SWOT and market
share analysis of all the key producers’ strategic
plans and the future supply-side picture out to 2020.
For the first time, the study provides a detailed breakdown of
steel consuming sectors for each market, including
construction, shipbuilding by type and automotive forecasts by
vehicle type out to 2020.
Who is the report for?
Southeast Asian Steel and Raw Materials Industry should be
required reading for all semi and finished steel and raw
material producers and traders alike, as well as governmental
The study covers about 95% of the Southeast Asian steel sector.
The report's analysis is based on trend discovery and includes
forecasts out to 2020, concerning finished steel products
shipments, trade and consumption on regional as well as a
Roman Kucinskij, a consultant with Metal Bulletin Research,
is one of the authors of the report.
For a copy of the Southeast Asian Steel and Raw Materials
Industry, please call +44 (0)20 7779
8000 or contact Brian Levich, consultancy and special
projects director, email@example.com, or call
+44 (0)20 7556
To download a free sample of the report, click here.
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