Steel expansion projects in SE Asia face delays due to Covid-19

The ASEAN region has been one of the most attractive markets for steel capacity construction and many Chinese investors have announced projects there over the past few years. However, the recent Covid-19 pandemic has caused many companies to postpone their projects, though some of them are still in place and may be put into operation by 2025.

“Due to Covid-19, most of the investments from China have been delayed, according to sources known to SEAISI. Some have been postponed and some others are undergoing review,” the South East Asia Iron and Steel Institute (SEAISI) has said in its latest report.

According to market sources in Indonesia questioned by SteelOrbis, the flat steel projects in the country will be finally completed, with the pandemic just delaying their launch. For instance, the new BF of 1.5 million mt of Gunung Raja Paksi is near to completion, which will lower the slab imports of the company in the future. The project of PT Krakatau POSCO for 3 million mt of crude steel per year is going to be finished by 2025, much later than initially planned, but “it is expected to cover growing demand, as Indonesia needs it,” a local source said. On the contrary, billet and long steel production expansion in Indonesia may lead to the oversupply in the market, sources believe. PT Dexin Steel with a capacity of 3.5 million mt of steel has been actively developing its billet exports, to China in particular, not receiving enough demand in the local market.

Market sources expect the restart of the 3 million mt of flat steel capacities of Megasteel in Malaysia, as the country does not have its own HRC production now, but the restart has been delayed a few times already.

The highest integrated steel capacities among all Southeast Asian countries - 20.5 million mt of steel in total - have been expected to come on stream in the Philippines. All these projects have faced delays in construction amid “the significant impact of Covid-19 on the overall economy in the Philippines,” a local source said.

In Vietnam, for now the most-awaited launch is Hoa Phat’s Dung Quat 2 Phase, which will help to boost HRC production and to increase its presence in the local market, which will further cut the import dependence of Vietnam. According to the company’s latest announcement, the launch of Phase 2 is planned for early 2022.