Apparent steel consumption in ASEAN increased by an average of 8.8% per year from 2009 to 2015 while steel production grew only by an average of 2.5% per year during the same period. Total steel production in the region accounted for only 40% of total steel demand. On the other hand, steel import registered a total of 70% of total steel demand and export was only 10%. Imports continued to surge significantly by an average growth rate of 13% per year from 2009 to 2015.
Steel making in ASEAN is mainly carried out by mini-mills with EAF facilities and most of the steel companies in the region are re-rollers. As a result, there is a need to import significant volumes of semi-finished steel every year. Total import of semi-finished product accounted for more than half of semi-finished steel demand in the region. The import of semi-finished steel grew by 17% y-o-y in 2015 and by nearly 50% y-o-y in the first half of 2016.
The bulk of the finished steel production in the region is commodity grade to serve the construction sector. Therefore, investment plans in the region are basically focusing on increasing steel production capacity to meet demand in the construction sector, especially in Philippines and Vietnam, where most of their steel demand (up to 80-90%) come from the construction sector.
Philippines’ two major steel companies in the country; namely, Steel Asia and Capitol Steel Corporation posted new investment plans in 2016. Steel Asia is investing in two new rebar plants with total capacity of 2 million tonnes per year. Capitol steel also announced its investment plan to add a new capacity of 500,000 tonnes per annum, to produce high grade rebar and the new plant is expected to be in operation in 2018. Other investments were from smaller mills to produce steel for construction and fabrication work, which is a booming sector for the country. One of them, DMCI, is planning to add a new heavy section fabrication plant with capacity of 36,000 tonnes per year.
Vietnam has the most steel investment projects in the region. Formosa Ha Tinh Steel, the first hot rolled flat steel mill in the country with the largest capacity in the region, was unable to put its plant into operation due to environmental issues.
Hoa Sen Group, one of the major domestically owned conglomerate, also has investment plans to build a large steelworks in the central coastal province of Ninh Thuan with maximum capacity reaching 16 million tonnes per year. Initial capacity in the first sub-phase will be 1.5 million tonnes per year which will be doubled to 3 million tonnes by end -2019. In its first phase, the proposed plant will produce long products.
Hoa Phat Group, another major conglomerate in Vietnam, is also investing into a new galvanizing plant with a capacity of 400,000 tonnes per year. The plant is expected to be in operation in 2017. The company will also add a new pipe making plant, with an annual capacity of at 120,000 tonnes.
Other notable investments include Lotus Ha Nam, which has invested in 110,000 tonnes of galvanizing line and 310,000 tonnes in steel pipe making; Ton Dong A Company, investing in cold rolling, galvanizing, pre-painted galvanizing line with a total capacity of nearly a million tonnes; Nam Kim JSC, investing in 330,000 tonnes per year capacity of galvanizing line and pre-painted galvanizing line; Thai Nguyen Iron and Steel Corporation, going into second phase of expansion of billet production capacity of 500,000 tonnes per year; Kyoei Vietnam, which also invested in 500,000 tonnes per year billet production capacity.
In the case of Thailand, the country’s recent investment activities came mainly from Japanese companies to produce quality steel for automotive sector, some of which came into operation before 2016. A recent new project is aimed at production of special grade steel. Two consolidated subsidiaries of Nippon Steel & Sumitomo Metal Corporation (NSSMC), namely The Siam United Steel (1995) Co., Ltd. (SUS), which manufactures and sells cold rolled steel sheets and Nippon Steel & Sumikin Galvanizing (Thailand) Co., Ltd. (NSGT), which manufactures and sells hot-dip galvanized sheets for automobiles, were merged to form NS-Siam United Steel Co, Ltd. (NS-SUS), for the upgrading of cold rolling –galvanizing mill to produce steel sheet products for automotive sector. In addition, Milcon Steel Plc. also upgraded its wire rod mill while Bangkok Iron and Steel Company invested in a new billet caster with a capacity of 400,000 tonnes per year.
Malaysia’s new investments came mainly from Chinese companies. Alliance Steel (M) Sdn Bhd, a wholly-owned Malaysian subsidiary of China’s Guangxi Beibu Gulf Iron and Steel Investment Co. Ltd. is investing in an integrated steel mill in Pahang for production of high carbon steel and H-shape steel. In late 2016, the State Government of Sarawak signed a MOU with Hebei Xinwuan Steel Group and MCC Overseas Limited to conduct preliminary feasibility studies for the development of an integrated steel plant in Sarawak, involving a capacity of 5 million tonnes per year.
Indonesia’s investment activities were mainly from the two major steel companies in the country; namely PT Krakatau Steel and Gunung Garuda Group. PT Krakatau Steel has invested in a new 1.2 million tonnes per year blast furnace and it plans to construct its second hot strip mill with a capacity of 1.5 milliont onnes per year (expected to be commissioned in 2019), which will bring the company’s total HRC capacity to 3.9 million tonnes per year. PT Gunung Garuda also invested in a new beam blank caster of 800,000 tonnes per year capacity in 2016.
In addition to the above, another notable project was from a foreign company, JFE Steel Corporation, which formed PT JFE Steel galvanizing Indonesia to establish a 400,000 tonnes per year galvanizing line to produce automotive steel.