Posted on 25 Oct 2024
A slew of potential massive steel mills and expansions in ASEAN will see the region requiring significant quantities of iron ore feedstock, Kallanish heard at this week’s Mysteel 2024 Asia Iron Ore Summit in Kuala Lumpur.
Potential new blast furnace-basic oxygen furnace capacity totalling 83.6 million tonnes/year and direct reduced iron projects of 14.5m t/y by 2030 will require 125-145m t/y of iron ore and 20-25m t/y of iron ore respectively. This indicates a combined iron ore demand of 145-170m t/y, Yeoh Wee Jin, secretary general of the South East Asia Iron & Steel Institute (Seaisi), told delegates.
The “mega” blast furnace mills which are being installed in ASEAN and India are the reverse of the decarbonising of steel industries elsewhere in the world, he noted. They are highly pollutant and go against the current shift towards decarbonisation amid a landscape of carbon taxes and CBAM, as well as commitments to meet net-zero targets.
While the large demand for raw materials will please suppliers, Yeoh questioned the sustainability of the regional blast furnace/BOF mega mills, which have come onstream rapidly since 2013. They are causing the “de-greening” of the industry and are expected to lead to an “explosion” of green house gas emissions in future, he warned. As a comparison, regional capacity of 78.1m t/y in 2021 comprised 22.5m t/y of BF/BOF and 55.6m t/y of EAF capacities.
The “humungous” amount of capacity coming up will overflow outside of the region as it far exceeds the region’s demand, Yeoh added. Regional finished steel demand stood at 74mt in 2023.
He estimated that overcapacity will outstrip demand around 2.3-2.5-fold in Vietnam and Indonesia, and by around 7.9-fold in Malaysia. The impact of overcapacity is already being felt with rising trade remedies and increased government scrutiny on new steel investments.
The massive steel projects are unsustainable given that investors face risks in financing such projects if policies change and products face carbon taxes or other barriers. However, the opportunities to supply higher grade iron-content material to DRI plants will rise, he added.
The main consumers of iron ore in the region are Vietnam and Indonesia (see table).
Source:Kallanish
