Greetings from SEAISI!
COVID-19 Continues to Break Records
Month after month, COVID-19 continues to spread and break records, in terms of infections and fatality. Another record broken is probably the amount of time that humankind remains at home, avoiding public places and at times, peering at the computer screen in an attempt to re-engage with friends and colleagues via video conferencing apps like Zoom and the like.
Steel Demand Forecast
It was through one of these apps, that I attended the worldsteel Economics Committee (ECON) meetings over the last couple of months. During these discussions, economists and steel experts debated about the impact of COVID-19 while they attempted to forecast the demand for steel in 2020 and 2021.
Meeting after meeting, forecasts were revised, almost all downwards. After all the debates, most agreed that 2020 will certainly be a bad year. National and regional lockdowns have severely affected the steel consuming sectors such as construction, automotive, machinery, shipbuilding and others. Demand for steel in many countries are expected to be down by double digit percentage points.
Everyone agreed that 2021 will see a jump in steel demand as countries recover from COVID-19. Governments will obviously put in resources to get their economies back on track. But still, the new norms which includes encouraging social distancing and discouraging mass gatherings will continue to apply downward pressure on demand. How good 2021 will be, is still a question mark, given the uncertainty in the winds.
The ASEAN Steel Industry Situation
Last month, we pointed out that ASEAN countries are also facing weak demand due to COVID-19. Lockdowns in various forms and disruption in global supply chains have stalled the construction industry and other manufacturing sectors for the past couple of months in the Philippines, Malaysia and Singapore. Even in countries that do not impose strict lockdowns, construction projects have slowed down due to restricted movements. Also, government funds are being diverted from public construction projects and other economic activities to fight the COVID-19 war.
Huge government stimulus packages have been announced to support the people and industries all over ASEAN; this is no different elsewhere in the world.
Countries that are dependent on oil, such as Malaysia, Brunei and Indonesia are facing a double whammy, as oil revenues dry up in the current oil shock.
Traditionally, ASEAN governments will pump prime the economies by increasing public construction works. By increasing demand this way, the recovery of the manufacturing sector and services will eventually follow. However, pump priming only works if governments have sufficient funds to do so. The current situation is worse because many countries are affected and funds from the more advance economies may no longer be readily available.
Supporting People and Industries
With so much resources being spent on stimulus packages to restart economies, ASEAN Governments really need to ensure that local employment is protected and that local businesses survive during these times.
As such, it is high time that, ASEAN Governments take a hard look at their import policies and slowing imports of “like” products. This will give the local industries a breather to survive. Local industries, NOT imports, provide tax revenues, employment and economic stability to nations. Local industries have loyalty while imports being imports, mostly go to the highest bidder.
I remember the time after the China export tsunami of 2013-2016, as regional demand improved, many shipments of steel from China intended for ASEAN countries were diverted elsewhere. Why? Because prices were higher elsewhere. You get the drift …
To understand more about the history of China steel exports to ASEAN, check out the headline news within this newsletter.
The 2020 SEAISI e-Conference
Get updated about what’s going in ASEAN and the Steel Industry during COVID-19! Come & join the 2020 SEAISI e-Conference.
The SEAISI Conference is the one and only annual event, by the Steel Industry for the Steel Industry in ASEAN. There is no other.
SEAISI will hold an e-Conference from 30 June 2020 to 2 July 2020. The event will run from 3pm to 6pm for 3 days, covering:
- Regional Developments
- Market Perspectives
- 10 Country Reports across APAC region
- Plenary Session with Steel Industry CEO’s discussing about COVID-19 impacts
These are topics you find in the usual SEAISI Conference & Exhibition held every year. The difference is, it will be online this year.
Selamat Hari Raya, Happy Eid Mubarak
The Institute would like to wish all our Muslim stakeholders, partners and friends, Selamat Hari Raya, Happy Eid Mubarak.
Keep Your Distance. Stay Healthy. Stay Safe.
YEOH WEE JIN