In a review of the year 2016, Tan Ah Yong, secretary general of the South East Asia Iron and Steel Institute (SEAISI) has stated that in the given year global steel prices showed a recovery led by the spike in Chinese steel prices. The steel industry in China has benefited from the increase in infrastructure spending by the government, a resurging property market, and an upturn in the automotive industry following the reduction of taxes on vehicle purchases. The strong rebound in commodity prices, in particular prices of coking coal which have trebled between July and November 2016, has also contributed to the higher prices of steel products. Meanwhile, due to stronger Chinese domestic market demand, steel export offer prices from China have also gone up.
According to Mr. Yong, the ASEAN (Association of Southeast Asian Nations) region continues to bear the brunt of Chinese steel exports. During the January-October 2016 period, China exported a total of 30.45 million mt of steel products to the ASEAN-6 market (Indonesia, Malaysia, Philippines, Brunei Darussalam, Singapore, and Thailand), representing a full one-third of China’s total steel export volume for the period in question. However, while the influx of steel exports from China to the ASEAN region is still a matter of great concern to the steelmakers in the region, the regional steel players could at least breathe easier with the recovery of steel prices and many of the steel producers are seeing a gradual return to profit.
Mr. Yong also stated that, besides higher steel prices, another factor which has contributed to the improving performance of the steel companies in ASEAN countries is the continuing expansion in steel demand in the region. In the first six months of 2016, apparent steel consumption in ASEAN-6 expanded strongly by 19.3 percent year on year to 39.3 million mt. With this, steel producers in the region were able to step up their production, resulting in output of hot rolled steel products surging 21.3 percent year on year to 16.5 million mt in the first half of 2016.
“The worst appears to be over for the global steel industry and the steel industry in ASEAN. However, the road ahead is still fraught with challenges and uncertainties. How this is going to play out will depend a lot on the developments of the Chinese economy and its steel industry,” concluded Mr. Yong.