FEATURE: ASEAN now a new hotspot for steel investments

Many overseas investors have already or are exploring steel investment opportunities in the ASEAN region as many ASEAN countries are with great market potential with their fast-growing economies, Mysteel understands from the market sources.

“Look at the global economy, I think the ASEAN region is attractive in that it has resources such as nickel and iron sands, and the regional demand for steel, especially for long steel for most, and flat steel as well for Thailand or Vietnam, though political stability and policy consistency may be problematic sometimes,” an official from a steel mill in Central China commented.

Indonesia and Philippines’ tightening their policies regarding metals mining and raw material exports such as nickel have also helped in prompting more overseas investments into their domestic markets, an industrial official from Philippines told Mysteel at the 2018 SEAISI Conference and Exhibition in Jakarta, Indonesia over June 25-28.

For 2017, the ASEAN-5 countries including Malaysia, Indonesia, Philippines, Vietnam and Thailand achieved an average GDP growth at 5.34% on year, which was higher than the 3.76% for the whole world, and it is expected to sustain at the rate in 2018, Tan Ah Yong, Secretary General of Southeast Asian Iron & Steel Institute, shared at the event.

So far, Indonesia is the one among the ASEAN-5 countries with the most number of completed or ongoing steel investments, totaling 12 projects or 16.34 million tonnes/year steelmaking or rolling capacity in combination with investors mostly from South Korea, Japan, and newcomers from China, according to the country report shared by Mas Wigrantoro Roes Setiyadi, chairman of Indonesia Iron and Steel Industry Association, at the event.

Among them, Chinese investments account five projects with 9 million t/y capacity comprising a 5.5 million t/y stainless steel rolling capacity and a 3.5 million t/y carbon steelmaking/rolling capacity in Indonesia Morowali Industrial Park, all being invested by Shanghai Decent Investment Group and Indonesia Bintangdelapan Group, with the stainless capacity already in operation.

Besides, China’s top stainless producer - Tsingshan Group, whose investments in Indonesia that is with a 3 million t/y of stainless steelmaking and the company has also co-invested with China’s Jiangsu Delong in Indonesia Dexin Steel, a 3.5 million t/y carbon steel hot rolling mill.

South Korea and Japan, however, have established their investments in Indonesia, Thailand and Vietnam before their Chinese counterparts, with South Korea’s Posco, for example, having invested in Krakatau Steel, so far the largest steelmaker in Indonesia, which will ignite a new blast furnace that will add on another 1.2 million t/y ironmaking capacity in 2018 to match its 3 million t/y slab/plate capacity.

Krakatau is also constructing a 1.5 million t/y hot rolling and it is also planning a cold rolling mill that may boast 1.2 t/y in capacity.

Other than Indonesia, China also established its steel presence in Malaysia with Alliance Steel (M) Sdn, a co-investment by China’s Guangxi Beibu Gulf Iron & Steel Investment Co and privately-owned Guangxi Shenglong Metallurgical Co in Kuantan on Peninsular Malaysia, which was commissioned by the end of 2017 with a designed steel capacity at 3.5 million t/y.

Formosa Ha Tinh Steel Corporation, Vietnam’s largest integrated steel mill in Ha Tinh province, north central Vietnam also went into operation in May 2017, which is a co-investment by Taiwan’s Formosa Group, China Steel Corp, and Japan’s JFE Steel, mainly producing HRC, CRC and Welded pipe. Ha Tinh is designed at 7 million t/y crude steel capacity and expected to run into full operation by the end of 2018.

Written by Crystal Lu, lujq@mysteel.com, and Hongmei Li, li.hongmei@mysteel.com