At the raw materials and scrap focus e-Event held by the South East Asia Iron and Steel Institute (SEAISI), Dato’ Lim Hong Thye, group managing director of Ann Joo Steel Berhad, and Nghiem Xuan Da, chairman of Vietnam Steel Corporation, shared their insights into overcapacity in ASEAN.
Mr. Thye confirmed that Malaysia steel industry has been facing overcapacity issue since 2016-2017. He stated that given the maximum steel demand stands at 10 million mt, the impending capacity is about 46 million mt, which encompasses WenAn Steel with a 10 million mt capacity and Alliance Steel targeting to increase the capacity to 10 million mt from 3.5 million mt. Steelmakers aim to export this capacity back to China since China has a number of BF/BOF projects. Thye added that India aims to increase its capacity to 300 million mt from 120 million mt, while half of these coming from EAFs. The investment in question will lead to a possible 90 million mt increase in ASEAN capacity. With China, India and ASEAN in the center of growth for at least the next 10 years, current investments will focus predominantly on BF/BOF projects.
Mr. Da, on the other hand, stated that while capacity utilization rates are high in Vietnam, the upcoming new capacities still cause additional concern. Hoa Phat, the country’s one of the largest producers, is launching a 5-6 million mt expansion project. Apart from Hoa Phat, another private company is exploring to invest in a 10 million mt project in less than five years. Da said all these are expected to result in an overcapacity in Vietnam.
Da also stressed that construction steel, wire rod and bar capacities are about 24 million mt, while the production was at 10.5 million mt and capacity utilization rate at only 50 percent in 2021. Cold-rolled capacity was about 9 million mt with 5 million mt of production and 60 percent capacity utilization rate. In addition, galvanized and coated capacity in 2021 was 10 million mt with a production of 6 million mt. Da highlighted that while Vietnam is facing an overcapacity in finished products, it is also concerned about the mega projects in Malaysia and Indonesia. According to Da, they are in talks with the government to control capacity expansions in the country.