Posted on 05 Oct 2021
The steel industry is a base industry that supplies materials to other industries including construction, automobiles, shipbuilding, machinery, home appliances and many others. Predicting the demand for steel is difficult and complex because demand is driven by many other sectors and economic conditions. The most difficult part to forecast steel demand in ASEAN countries is the issue of data availability and the sufficiency of existing data.
SEAISI kicked off the first 2022 ASEAN Steel Demand Forecast on 24 August 2021, which was an online meeting for invitees only. World Steel Association and other Experts from the steel industry in each ASEAN-6 countries (including Vietnam) and key steel consuming sectors, such as construction, automotive and shipbuilding sectors were also invited.
The meeting focused on steel demand forecast for ASEAN-5 countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. The forecast followed the concept of SWIP (Steel-Weighted Industrial production) index utilized widely by worldsteel and its member countries.
The presentations were prepared and presented by members of the Statistical and Economics Committee (STECO) with the focus on the analysis, the latest economic indicators and outlook, trends of the steel market and key strategic issues affecting the future of the steel business, especially trends of major steel consuming sectors.
Many economic indicators in the five countries indicated a significant recovery in the second quarter of 2021 amidst the continued increase in daily new infected cases. It is expected that economy in ASEAN-5 countries should remain positive in 2021. Discussion among invited guests from various related industries and STECO members have been derived.
All in all, steel demand is predicted to be growing in 2021, led by Singapore and Philippines. This is partly because of the low-base in 2020. However, with a confidence on the government’s effort to continue mega’s projects, the Singapore and Philippines teams believe that their steel demand would reach double digit growth rates in 2021 of 50% and 26% respectively.
Indonesia’s steel demand is expected to return to 6% y-o-y although the country is facing high number of daily new infected cases in the first half of 2021. This could be because the government still allowed many business sectors and manufacturing sectors to continue their operation during the bad pandemic situation.
Thailand and Malaysia predicted steel demand to grow with a moderate rate, by 4.7% and 3.2% respectively. The key industries that are expected to drive such positive growth rates during the pandemic is the government’s infrastructure projects as well as the export-oriented sectors.
Apart from the ongoing government’s mega projects in many countries, a powerful recovery from the lockdown in many countries such as China and European countries could be a good sign for ASEAN countries to enjoy the growth in export-related sectors. Stable recovery is expected to continue into 2022.
Despite more optimistic situation and prediction over the 2021 and 2022 steel demand in ASEAN-5 countries, we continue to face some factors that point to downside risks. First of all, Delta virus is still spreading while there is still slow progress in vaccination in some countries. This combines with possible new variant virus could remain a key source of uncertainty and for that containment effort would be still on-going. This could delay return to normalcy. SEAISI and the STECO team will still need to carry on our work to keep an eye on the situation.
STECO members have put a tremendous effort to provide steel demand short term forecast for their updates of steel demand and supply, presented at SEAISI annual Conference and Forum every year. This effort of conducting a presentation of steel short term demand forecast mini event was inspired by the Economics Meeting at the World Steel Association. Many thanks to the worldsteel for their continuing support. Our invited guests and experts have also contributed to the event with their points of views. Last but not least, thanks to all STECO members from ASEAN countries for building their information base and developing methodologies and processes for forecasting.
This has been a fruitful and successful event toward ASEAN steel demand forecasting. We will be back next year.
Pichsini Tepa-Apirak
Source:SEAISI
