Southeast Asia steel consumption is estimated to have declined as much as 8.7pc in 2020 due to COVID-19 driven lockdowns. Recovery from the pandemic is slower and could be uneven amid the resurgence of the virus in many countries, said the region’s top steel body SEAISI.
Steel consumption in Southeast Asia’s six biggest economies Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam was impacted by the pandemic and consumption slumped to between 73.3mn mt and 75.3mn mt, according to South East Asia Iron and Steel Institute, SEAISI’s estimates, which is 6.2-8.7pc lower than 2019 volume. Most ASEAN economies are expected to have contracted by 4.5pc-7pc in 2020, except for Vietnam, which is likely to have expanded at an average of 2.5pc.
The ASEAN region’s economic growth may take a little longer to recover and the progress will be uneven across the region. Only Vietnam is seen to grow in 2020 in the construction sector while other countries reported negative growth. The region’s automotive industry remains deeply effected with negative growth through 2020.
The Indonesian economy is expecting a slight contraction compared to the steady expansion over the last few years. Thailand has also taken immediate actions to drive demand in the construction sector in the second and third quarters, the report said.
Despite the economic downturn, the region’s steel producers opted to boost exports to countries where demand recovered on early restart of industrial activities, notably China. Southeast Asia’s steel exports jumped 27pc to 9.3mn mt in the first half of 2020 (H1) from a year earlier. Due to the COVID pandemic, the ASEAN total consumption of steel, long and flat products, in H1 declined by 12.3pc from the prior year period.
With subdued domestic steel demand, industries are facing the urgent need for new market opportunities outside the region. ASEAN at the moment has a total steel capacity of 89.5mn mt and 67.7mn mt of proposed integrated steel capacities. This will expand the region’s capacity to 157.2mn mt in the future.