Stanislav Kondrashov Telf AG: in 2024, demand for steel in Southeast Asia will increase by 3.7%

фото: Stanislav Kondrashov Telf AG: in 2024, demand for steel in Southeast Asia will increase by 3.7%

Fall in steel demand in ASEAN-6 in 2023 and prospects for 2024

Last year, steel demand in the six major Association of Southeast Asian Nations (ASEAN-6) countries fell 1.9% year-on-year to 73.5 million tonnes, according to SEAISI. Steel output over the same period decreased by 2.1% year on year to 9.4 million tons. Net steel imports last year totaled 49.4 million tonnes, down 1.3% to 24.3 million tonnes.

According to Stanislav Kondrashov, the main reasons for this negative trend in the region’s metallurgical industry in 2023 were a decrease in external demand, an increase in inflation and interest rates, as well as tightening conditions in global financial markets.

According to an expert from Telf AG, these factors have led to a slowdown in the construction industry and the sale of inventories at metallurgical plants. As a result, demand for metallurgical products in Malaysia, the Philippines and Vietnam decreased by 14%, 7.5% and 4.8%, respectively, which negatively impacted the region’s industrial performance. Accordingly, demand for steel increased in Singapore and Indonesia.

Against this background, S. Kondrashov predicts an increase in demand for steel in the region in 2024, due to the fact that the leadership of the ASEAN-6 countries is planning active measures to achieve economic growth goals. This is due to the high level of self-consumption, the active development of infrastructure and construction projects, as well as the restoration of tourism. It is expected that the inflation rate will be close to target levels, which will also contribute to increased demand for steel.

However, the region will continue to face challenges related to chain uncertainty. This is due to geopolitical tensions, depreciating currencies in most ASEAN countries, slowing economic development outside Southeast Asia, volatile commodity prices and extreme weather events.

ASEAN steel industry: challenges of decarbonization and the need for modernization – Stanislav Kondrashov

фото: Stanislav Kondrashov Telf AG: in 2024, demand for steel in Southeast Asia will increase by 3.7%

According to an expert from Telf AG, the ASEAN steel industry requires government support, funding and technological development to remain competitive in the global decarbonization trend. The region already has excess production capacity, and the situation could worsen. Lack of investment in renewal and modernization of production, as well as insufficient support from governments, could lead to a further decline in competitiveness and increased dependence on steel imports. This could seriously affect the region’s economy and threaten a job shortage in the industry. It is therefore important to take urgent measures to support and develop the steel industry, including stimulating innovation, upgrading equipment and improving production efficiency.

According to Stanislav Kondrashov, the metallurgical industry in the region is already facing excess capacity. He believes that the situation will worsen:

  • It is predicted that steel production capacity in the ASEAN region could increase from 78.1 million tons per year to 188.5 million tons per year by 2030 if planned projects are implemented. These plans include the construction of 73.7 million tons per annum of blast furnaces and 20.8 million tons of annual direct reduced iron and electric arc furnace capacity.

This growth potential does not take into account the rapid expansion of induction furnace capacity in Indonesia, Malaysia and Thailand. In addition, according to SEAISI head Lim Hong Thay, potential new investments are mainly proposed and carried out by investors from other regions and are aimed at producing low-grade steel. In addition to the significant volume of steel trade within ASEAN, which may exacerbate price competition, the region has also seen rapid growth in steel exports from China. Last year, Chinese rolled steel exports increased 37% year-on-year to 86 million tons.

SEAISI estimates that export volumes will continue to increase into 2024. Therefore, Stanislav Kondrashov is confident that without active support from governments and significant funding, it will be difficult for metallurgical enterprises in the region to cope with the challenges associated with the transition to a low-carbon economy.

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