Although the direct impact of the Iran war on the ASEAN steel industry has not been so big and has been manageable, Southeast Asian steel producers have been facing a considerable shortage of energy as they have depended a lot on supply from the Middle East. This topic has been one of the most discussed issues during the Southeast Asia Iron and Steel Institute (SEAISI) conference and exhibition held in Singapore on May 18-21.
The blockade of the Strait of Hormuz threatens around 20 percent of global LNG and oil flows and has resulted in the rise of oil prices up to $120/barrel with Qatar freezing output across products including LNG, urea and methanol. The direct impact on the logistics of steel and raw material products is obvious. “Asia-Europe freight rates have surged over 200 percent and war-risk premiums have escalated, materially increasing delivered steel costs,” Rajiv Mangal, vice president safety health and sustainability at Tata Steel India said during the event.
The Philippines most impacted
However, apart from the direct impact on steel producers in Asia, the shortage of fuel is now an even more important challenge in the ASEAN region, which consumes about 5 million barrels of oil daily while producing only 2 million (over 50% of crude oil and LNG were supplied from the Middle East to the ASEAN region). Among ASEAN countries, the most severe energy shortage has been seen in the Philippines, which was dependent on the Middle East for 95 percent of oil supply, with its strategic oil reserves enough for only 45 days, Yeoh Wee Jin, secretary general of SEAISI, mentioned. “We do see stable demand. We can produce and supply, but today we need to pay much more attention to how to transport our steel to buyers. Will we have enough fuel tomorrow?” Ronald Joel C. Magsajo from SteelAsia Manufacturing Corporation, who has also become the new chairman of SEAISI for the next two years, told SteelOrbis on the sidelines of the conference.
Apparent steel consumption in the Philippines is expected to be around 10.5 million mt in 2026 (vs 10.4 million mt in 2025), which is “flat to minimal growth due to both domestic and foreign political conflicts, resulting in economic fallouts,” Geraldine Santos, commercial head at Manila Multipurpose Terminal, part of ICTSI, said, adding that earlier this year the forecast had been stronger. But, also, she added that the expectations for 2027 have remained rather bullish with demand forecast to grow by six percent to 11.1 million mt owing to government projects prior to the 2028 national elections.
The Philippines steel industry itself has been performing well recently after some slowdown following the pandemic. “We are preparing for growth in demand. SteelAsia is going to almost double its capacity to 4.8 million mt. And we, ICTSI, are investing $800 million in South Luzon Container Terminal,” Geraldine Santos added. SteelAsia Manufacturing Corporation is preparing for the launch of its sections mill in Batangas with a 50,000 mt annual capacity by the end of this year, as confirmed by the company representative. This will be the first sections mill in the country, but, even though the company has plans to add EAF capacities to cover its own needs in liquid steel and the initial timeline was 2027, the company will be more careful and may change plans if the situation regarding energy supply does not change significantly by next year.
Other ASEAN mills also under pressure from energy shortage
Vietnam has also been very dependent on oil supply from the Middle East going through the Strait of Hormuz - depending on it for 88 percent of its oil supply, with its dependence on gas supply from the region reaching 49 percent. But since Vietnam has some of its own production and has diversified its crude oil sources, supplying from the US and Africa (Nigeria, Angola and Oman), the forecasts for its steel industry have not been impacted much. Vietnam remains the driver of steel demand and production in the ASEAN region with consumption expected to be 28.5 million in 2026 and 28.8 million in 2027 (28.1 million mt in 2025). At the same time, steel production in the country is projected to surge by 25 percent in 2027 to 26.8 million mt compared to 2025, according to Le Viet, the representative of the Vietnam Steel Association.
Malaysia is forecast to have steel consumption of 8.4 million mt in 2026 and 8.5-8.6 million mt in 2027, which means the growth trend continues but the pace of it is rather slow. Similar dynamics are seen in other ASEAN countries: Indonesian steel demand is expected to add four percent in 2026 to 20.1 million mt and to rise by the same amount in 2027 to 20.9 million mt. Consumption in Thailand will be almost unchanged in 2026 at 18.77 million mt, according to the Iron and Steel Institute of Thailand.
Among other Asian markets, the energy crisis has hit the Indian steel market significantly. India was dependent for 88 percent of its oil supply on the Strait of Hormuz, while 50 percent of its gas supply from this area. “Large mills are placed more or less fine, but we do hear that Indian IF operators are building own fuel reserves, which is really a big sign of the shortage,” an Asian market source commented. India’s largest stainless steel producer Jindal Stainless Limited has been forced to scale back operations due to shortages of industrial gases, a problem the company links to the ongoing conflict in West Asia. The company operates two plants with a total capacity of 3 million mt, with one of them working at minimal rates, market sources said.