Commenting on the US steel tariffs, Tan Ah Yong, secretary general of the South East Asia Iron and Steel Institute (SEAISI), has stated that the tariff decision by US President Trump is not expected to have a serious direct impact on the steelmakers in the ASEAN (Association of Southeast Asian Nations) region.
According to Mr. Yong, none of the ASEAN countries is in the list of the top 10 steel exporting countries to the US. Nevertheless, Vietnam, the biggest steel exporting country in the ASEAN region and the 12th largest steel exporter to the US in 2017, might be affected by the tariffs. Vietnam’s steel exports to the US have surged over the past couple of years and the growth momentum is likely to be affected by the imposition of the 25 percent tariff.
As for the redirection of steel products to the ASEAN region, Mr. Yong stated that this is a possibility as the region is a major steel importer. However, it is unlikely to be a matter of great concern to the steelmakers in the region. The biggest steel exporting country to the ASEAN region, China, is not a significant steel exporter to the US, exporting only around 800,000 mt of steel products to the US in 2017. On the other hand, the ASEAN region could potentially see an increase in the export of steel products to the region from other countries like Russia, Turkey and India, he added. These three countries, together, exported around 6.5 million mt of steel products to the US in 2017, he noted.
Mr. Yong also pointed out that a more significant impact on the steelmakers in the ASEAN region arising from the action of the US is the possibility of an increase in the prices of ferrous scrap, the main feedstock material for steelmaking in the region. The imposition of the 25 percent import duty is likely to result in an increase in domestic steel production in the US. As close to 70 percent of the steel production in the US is done via the electric arc furnace (EAF) process, this will lead to a surge in the domestic consumption of ferrous scrap, thus reducing the volume of scrap available for export from the US, a major ferrous scrap exporting country. The resultant increase in the prices of the feedstock material will exert further pressure on the cost of steelmaking in the ASEAN region.