Steel consumption in the ASEAN region (based on demand from the six major sources) is going to add 6.1 percent in 2021 amid improved construction after a sharp drop in 2020 due to the lockdowns and pandemic effects, according to the report by Yeoh Wee-Jin, secretary general of the South East Asia Iron and Steel Institute (SEAISI) during the SEAISI 50th Anniversary e-Conference & Exhibition. Nevertheless, as not all challenges have been overcome, consumption in the ASEAN region may return to pre-pandemic level only in 2022 as the earliest.
Demand in the ASEAN region is forecast to increase by 6.1 percent from 2020 to 74.9 million mt in 2021. The strongest support will come from Vietnam and Indonesia, where consumption will reach or even exceed the pre-pandemic 2019 level already in 2021. For instance, demand in Vietnam will go up by 1.4 million mt or 5.8 percent to 24.7 million mt this year after losing 1 million mt last year. Indonesian consumption will reach 16 million mt, up by six percent year on year and almost in line with the 2019 result. The strong recovery of construction in Malaysia may be less than expected due to recent increase in infection cases in the country. The Philippines are going to show an increase by six percent or 0.5 million mt to 9 million mt in 2021. Consumption in Thailand is forecast at 17.1 million mt versus 16.3 million mt in 2020.
Last year, the steel market in the ASEAN region was adapting to the new pandemic situation with the supply chain moving from global to more regional. As a result, in 2020 steel production in the ASEAN region went up by 3.7 percent to 46.3 million mt “to support the short fall in imports due to logistics constraints,” according to Yeoh Wee-Jin. Net imports fell by 31.9 percent or as much as 11.4 million mt in 2021 to 24.3 million mt. This shift to local steel products was mainly seen in the longs segment, while a large part of demand for flats was still served by imports. Moreover, in early 2021 imports of flat steel products from China to the ASEAN region posted a sharp rise, offsetting declines of shipments of other products. For instance, in the first quarter of 2021, HRC imports from China totaled 1.64 million mt, up by 208 percent year on year, while coated steel shipments increased by six percent.
According to Yeoh Wee-Jin, the market hopes to come back to pre-pandemic levels in terms of consumption in 2022, but this will depend on the situation in construction and the vaccinations in different countries. Though imports are expected to continue to gradually increase in 2021-2022 in these conditions in the ASEAN region, maybe more time will be needed to return to pre-pandemic levels, market participants said. “The government does vaccinations but with the current pace it will take two to three years to complete. So the local or regional supply chain will remain strong,” Purwono Widodo, business development director at PT. Krakatau Steel and the representative of Indonesia, said.