CONF: ASEAN steel sector undecided on China investments
Chinese-invested steel projects unveiled to date in the ASEAN region are estimated to at 35-45 million tonnes/year crude steel capacity in total, market sources noted. The ten-member ASEAN group includes countries such as Thailand, Vietnam, Philippines, Indonesia, and Singapore.
Hebei Iron & Steel Group and Jianlong Group – two of China’s top ten steel mills – started to make moves to invest in the region’s steel sector in 2018 and 2019, according to Tan Ah Yong, Secretary General of South East Asia Iron and Steel Institute (SEAISI).
“Steel projects partially or wholly invested by Chinese enterprises are, in general, welcomed,” an Indonesian market source attending the conference said. “Especially if they are going to produce steel products that we are not producing or are unable to produce,” he told Mysteel Global.
The 3.5 million tonnes/year long-steel project Alliance Steel (M) Sdn Bhd, a 100% China-invested steel enterprise in Kuantan on Peninsular Malaysia, is one project that was mentioned multiple times at the conference, Mysteel Global notes.
“When the project was approved, it was designed to produce high-end long steel and large sections, but so far, it has been producing just commercial grade rebars and wire rods since the commissioning (in Q4 2018),” a senior Malaysian steel mill official observed.
“Consequently, Alliance has been competing fiercely with Malaysia’s domestic producers and hurting their interests as Malaysian construction steel prices have been declining as a result of the pricing war,” he grumbled.
At the conference, an ASEAN delegate voiced the fears of many when he remarked that if Chinese steel investments grow at the fast pace, they may force small-sized steel mills in the region out of the business ultimately, and he also wondered that as China’s economic growth has been slowing down, whether Chinese steel products “will be dumped into ASEAN again”.
To these, Tan admitted that the concern is real, especially if all the steel projects now at the planning stage are to materialize.
“In ASEAN, China’s investments are far more than those from South Korea and Japan, and if all are realized, they will definitely raise an alarm. We welcome steel investments, but we’d like them to produce products that are not produced in the region yet,” Tan answered.
“We can and have voiced our concern through the China Iron & Steel Association for the association to convey the message to its member mills, and we will monitor closely what is happening,” he said. He reminded delegates that “some (Chinese projects) may not come on stream, though some will definitely come to the region.”
The ASEAN-6 country, comprising Malaysia, Vietnam, Indonesia, Singapore, Philippines and Thailand, has remained a net steel importer over the past few years, and among the import origins, China has secured a dominant position, providing 38-39% of ASEAN’s total steel imports for 2017-2018, though the proportion represented a substantial reduction from the 52% for 2015-2016, as China’s domestic steel market had been robust in the past two years, Tan shared in his presentation on June 17.
In 2018, the six countries’ apparent steel consumption recovered by 5% on year to 80 million tonnes, and to fulfil the region’s needs, they produced 43 million tonnes of finished steel, up 16.1% on year and imported 50.3 million tonnes of finished steel, up 2.4% on year.
Written by Hongmei Li, li.hongmei@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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