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Thailand emerges as Japan's largest steel products importer

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Thailand emerges as Japan's largest steel products importer
Latest company news about Thailand emerges as Japan's largest steel products importer

Thailand emerged as the top importer of Japanese steel products for the first time in 2018, as major Japanese auto, home appliance and machinery makers have moved into Southeast Asia's biggest production hub.

Japan shipped 5.9 million tonnes of steel products to Thailand last year, up 5.2% from a year ago, surpassing exports to South Korea and China, which had been Japan's two largest steel consumers for the last two decades.

South Korea imported 5.4 million tonnes, down 9.5%, and China imported 5.6 million tonnes, off 1%, the Japan Iron and Steel Federation said on Thursday.

Steel is Japan's fourth-largest export item after automobiles, semiconductors and auto parts. Japan, the world's second-largest exporter after China, shipped 36.5 million tonnes abroad last year.


South Korea had been the top importer of Japanese steel products partly because of its position as the world's leading shipbuilder.

Generally, the construction sector accounts for a large portion of the entire steel consumption in many countries.

But Thailand has a distinctive steel consumption structure compared to other Southeast Asian nations, with automobiles, consumer electronics and machinery accounting for 19%, 8.7% and 6.6% of all steel consumption, respectively, according to data of the Southeast Asia Iron and Steel Institute.

"In the wake of the 1997 Asian financial crisis, Japanese automakers relocated their production lines to Thailand as a market and a manufacturing and export hub for pickup trucks and later for small eco-friendly cars," Kazushi Shimizu, an economics professor at Kyushu University, said in an email interview.

Thailand, Southeast Asia's second-largest economy, after Indonesia, boasts about half of the regional vehicle output of around 4.4 million units, according to 2018 regional statistics.

The Japan-Thailand Economic Partnership Agreement, which took effect in 2007, has also boosted Japanese steel shipments to Thailand, enabling Japanese steel products bound for Thailand to become tariff-free in 2018, said Shimizu, a Southeast Asian economy expert.

Major Japanese steelmakers such as Nippon Steel and Sumitomo Metal Corp and JFE Steel Corp have blast furnaces only at home due to massive investment sizes, political and economic risks abroad and other reasons.

But Japan's two largest steel mills and Japanese trading houses have established a number of downstream processing bases in Southeast Asia, mainly in Thailand.

Japanese steelmakers have shipped crude steel to these countries and processed it there to meet demand for high-quality products from Japanese manufacturing affiliates operating in the region.

Southeast Asia's robust demand has supported Japanese steel exports as its shipments to the region account for 35% of the world total, the Japan Iron and Steel Federation says.

But the World Steel Association forecast in its short-term outlook last October that growth of global steel demand will slow to 1.4% this year, down from a 2018 estimate of 3.9%.

"Japanese steelmakers are likely to face weak external demand amid tepid growth in global steel consumption in the long run," said Masashi Kaneko, head of the international trade and overseas market research group at the Japanese federation.

Despite Thailand's strong appetite at present, "Southeast Asian countries such as Indonesia and Vietnam are gearing up to boost domestic steel output for domestic use."

Pub Time : 2019-02-01 17:13:55 >> News list
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