ASEAN Steel Consumption Increased Continuously at a Compound Growth Rate of 10% From 1998

ASEAN steel consumption increased continuously at a compound growth rate of 10% from 1998 to 2011. Production surged by CAGR 6.4% while import rose by 8.4% during the same period. ASEAN has become a net importer of steel with net import growing by 15%YoY in 2011 and 20% in the first half of 2012. The bulk of the imports are flat products. Import of hot rolled coil and coated sheet surged by an average of 10% while import of hot rolled plate registered an average growth rate of 8.6%, followed by cold rolled coil import with CAGR 6%. Import of wire rod registered an average growth rate of 10% for the last 13 years whereas imports of section and bar increased by 7% and 5%, respectively.

The largest source of import was Japan, which accounted for 26% of ASEAN total import in 2011 followed by the import from China with a 18% share of total import. Import from China has increased significantly over the last few years. Figures compiled by SEAISI reveal that in the first half of 2012, the share of import from China into ASEAN has risen substantially to 23%, just one percentage point lower than the portion of import from Japan.

Despite the substantial increase of import into the region, intra-ASEAN steel trade seemed to have stagnated with a share of less than 10% of total import. Intra-ASEAN trade of scrap and semi finished steel peaked in 2003 at around 2 million tonnes and dropped sharply and remained at the level of below 1 million tonnes since then.

Intra-ASEAN trade of flat and long products rose by an average rate of 9.2% and 10% from 2000 to 2011, respectively. Import of HRP within the region rose by 37% CAGR in 11 years. Import of coated sheet within the region stagnated. 

Import of bar within the region surged by 14% CAGR from 2000 to 2011 and import of wire rod increased by 10% CAGR from 2000 to 2011.

From the amount of 34 million tonnes of finished steel import into ASEAN in 2011, one-third of the volume was to serve the construction sector. The balance of the imports were used in other sectors such as automotive, shipbuilding, electrical appliances, oil & gas etc. According to SEAISI's analysis, nearly 80% of the total import into the region could be substituted by domestic supply. The balance of 21% of total import is difficult for intra-ASEAN supply due to lack of domestic technology.

However, there are three main impediments to the promotion of intra-ASEAN steel trade. Firstly, steel companies in the region are basically producing competing products. For example, there are a total of 13 hot rolled sheet/plate companies in the three main steel producing countries; namely, Indonesia, Malaysia and Thailand and all of them are basically producing the same products.

Secondly, due to the stiff competition from imports, countries in the region are increasingly resorting to adoption of trade measures to protect their own domestic producers which also target other ASEAN countries. Malaysia, for example, recently imposed preliminary anti-dumping duties on wire rod from five countries; one of which is Indonesia. Lastly, all ASEAN countries have their own national standards for steel products. There is no uniformity of standards and no mutual recognition among the countries.