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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
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
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
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 countries.
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 export volumes.
Methodology and coverage
A new Metal Bulletin Research strategic forecast study -
Southeast Asian Steel and Raw Materials Industry has just been
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, firstname.lastname@example.org, or call
+44 (0)20 7556
To download a free sample of the report, click here.
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