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Fierce Competition in Growing Southeast Asian Steel Market

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Fierce Competition in Growing Southeast Asian Steel Market
Latest company news about Fierce Competition in Growing Southeast Asian Steel Market

In many parts of the world, the outlook for growth in steel demand is quite modest. However, the region that continues to buck the trend is Southeast Asia. This area is a steadily developing market. All ASEAN countries recorded positive growth in 2018 – with similar projections expected, this year. Increased activity from the construction sector continues to be the catalyst for the rise in steel demand.

Last year, a double-digit percentage increase in ASEAN steel production was noted. The ramp up of local facilities, such as Vietnamese steel manufacturer, Formosa Ha Tinh Steel Corporation, partially helped to provide the uptick in regional output. Nevertheless, Southeast Asia continues to be a significant net importing region for steel products – with China being the main source of supply.

Despite a slowing domestic market, Chinese steel manufacturers continue to produce record amounts of steel. As a result, Chinese mills will inevitably turn their attention to traditional export markets, such as ASEAN, to sell their excess supply. Amid growing competition, both locally and from other steel exporting nations – notably Turkey, Russia and India – MEPS anticipates that Chinese producers will reduce their export prices, in order to maintain their market share, in the region. This is likely to have a dampening effect on values across the region, for the remainder of the year.

At the recent South East Asia Iron and Steel Institute event in Bangkok, the consensus view of conference attendees was that ASEAN steelmakers may fail to capitalise on the rise in regional consumption, due to fierce foreign competition. Several Southeast Asian steel producers successfully petitioned to implement trade protection measures. However, this has, largely, failed to stem the flow of imports into the region. Chinese, Japanese and South Korean producers, in particular, continue to invest heavily, in steel manufacturing, in the region. However, it is reported that this level of foreign intervention may be to the detriment of regional mills.

It is widely expected that Southeast Asian steel values will be under negative pressure, in the coming months. This is, partly, due to the likelihood of reduced import price offers from Far East suppliers, notably China. In the longer term, MEPS predicts that the ASEAN region will continue to be an attractive proposition for traditional steel exporters, amid stagnant growth projections, in the majority of steel-consuming countries.

Pub Time : 2019-07-02 08:50:12 >> News list
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