Special Feature: ASEAN Export Opportunities
Posted on 06 April 2021
In the last e-Talk held last year in October, the session highlighted that ASEAN 6 countries (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) had been exporting exceptionally higher volume of steel to China especially Semifinished Products, Wire Rods and Bars. China’s control of the COVID-19 pandemic and early restart of the economy had demanded an immediate supply of steel for its infrastructure projects, at a point in time where ASEAN exports were also very competitive. It was also noted to the delegates that this is the opportunities for the ASEAN steel maker to trade their products when local demand was at the lowest during the COVID-19 pandemic time. However, at the end of the session, discussion hovered around the question if the trend will continue for the whole year.
Based on the preliminary data 2020 January to November, it shows that ASEAN-7 (ASEAN-6 and Myanmar) export is still predominantly to China, about 43% of total steel export of 19.5m MT (see Table 1). The share has not dropped. In fact, the share of volume is higher than the last analysis in the e-Talk (35%) with the same inclination towards Semifinished Products, Wire Rod and Bars.
The preliminary data also indicated that, besides China, ASEAN-7 export to other countries collectively is standing at 57% of its total export which is not less important to the region. A selective analysis on exporting destination show market within ASEAN-7 is still a large and structurally consistent market. From January to November 2020 ASEAN-7 exported 11.1m MT of steel to countries besides China, mainly to its member countries Indonesia, Philippines and Malaysia, being the top 3 destinations (see Table 2) with the share of 16.8%, 10.8% and 10.0% respectively. Wire Rods, Hot Rolled Coil and Pipe & Tubes are the main products traded for the restart of the region’s construction, automotive and manufacturing sectors. Exports of Billet and Wire Rods to Philippines together has amounted to about 9.3% of the total export, to meet several of its country mega infrastructure projects. ASEAN-7 has also been supplying Hot Rolled Coil to Indonesia and Malaysia as demand for flats of those countries has increased.
ASEAN countries have recovered much faster compared to other economies around the world. The region is expected to return to its growth this year, inline with the progressing rollout of the vaccine programme. SEAISI has estimated that steel consumption for the region will grow at the rate about 4-5% in 2021. Local steel producers ought to focus back into the ASEAN market as the market in China is seen to be a seasonal opportunity and this opportunity may not continue after the pandemic. ASEAN market after all has always been driven by strong production linkages within ASEAN countries.
Table 1: 2020 ASEAN 7 Export (Jan – Nov 2020) (Total Export = 19.5 million MT)
Table 2: 2020 ASEAN 7 Export Outside China (Jan – Nov 2020) (Total Export = 11.1 million MT)
Source : SEAISI