CONF: Investment chances on a bumpy path, fasten seat belt
Kazuo Fujisawa, principal, Overseas Business Planning Dept of JFE Steel Corporation, reminded the audience that it is important to do research on local conditions before investing, and the successful model in China or other regions may not be repeated elsewhere.
“Fasten your BELT when you hit the ROAD! Drive SAFELY!” he concluded his remarks at the panel discussion on the international steel capacity cooperation and development.
The ASEAN region, in particular, is with great potential for steel investments, as it has been relying on imports to satisfy half of its steel consumption, Mysteel Global understands.
Yoelliam Agus from Indonesian Iron and Steel Association agreed that some infrastructure projects in the country such as rails because of the ongoing relocation of the country’s capital from Jakarta to Kalimantan may drive up the steel demand, but he warned that long steel has already been trapped in overcapacity while flat steel and beams are still in short supply.
Zhang Ye, vice president of Metallurgical Corporation of China (MCC), shared the real-life experience in convincing one of the customers to invest in flat steel instead of the originally-planned long steel project in Malaysia, as MCC, has been contracting steel projects in ASEAN countries, is well aware that “long steel has already faced overcapacity in Malaysia”.
Overzealous and irrational investments may lead to a bizarre in a particular market, Zhang said at the panel discussion, using China as an example as the country’s long steel margins are much higher than flat steel though the latter should be more value-added in common understanding.
“China’s steel industry had been obsessed for a high ratio of flat steel in the total output, ignoring the higher demand for construction steel in reality, but we should have taken into consideration of the real needs when we structured the industry and steel products,” he said.
He elaborated that when planning for a steel project, investors should take into consideration of a few factors such as that “investors should pick up a location that is either near to the steelmaking raw material resources or having an easy access to imports, and how big or at what stage the local steel market is and what it really needs”.
The attraction for investors will be present in the years to come, and Myanmar, for example, has recently been identified with a great market potential, and Kay Thi Lwin, chairman of Myanmar Iron and Steel Association Myanmar, confirmed the growing attention Myanmar has been receiving from potential investors.
“Myanmar is an import-based market, our steel consumption is just 2.5-3 million tonnes/year with 90% being imported,” she said, sharing that some Chinese steel investors have shown interest in setting up steel mills in this ASEAN country.
China’s Kunming Iron & Steel, for example, had already initiated a 4 million tonnes/year steel project in Myanmar, which may “replace the imports”, being mutually beneficial, she added.
“Our major trade partner is obviously China”, she stated, as China’s steel exports accounts for 85% of Myanmar’s total steel consumption.
Written by Anna Wu, wub@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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