Performance of the ASEAN Iron and Steel Industry in …seaisi.org/seaisi2017/file/file/full-paper/Session1...Performance of the ASEAN Iron and Steel Industry in 2016 and Outlook Presented

Performance of the ASEAN Iron and Steel Industry in 2016 and Outlook

Presented by:

Tan Ah YongSecretary GeneralSouth East Asia Iron and Steel Institute (SEAISI)

1

CONTENTS:

Macroeconomic Scenario

Steel Production and Consumption

- ASEAN

- By country

Demand and Supply

Significant Developments

Conclusions

2

3

Economic Indicators

Source : IMF World Economic Outlook updated April 2017

In April, IMF revised up its projection for world economy to grow at 3.46% in 2017 and 3.65% in 2018. The projection for advanced economies’ GDP growth rate was also revised up to 2% in 2017 and 1.98% in 2018.

China’s GDP growth rate will slow down from 6.7% in 2016 to 6.6% in 2017 and will continue to decelerate to 6.2% in 2018.

India’s economic growth rate in 2017 was revised from 7.6% to 7.2% but the rate is predicted to increase to 7.7% in 2018.

Growth rate for ASEAN-5 economies is expected to increase to 5% in 2017 and expand to 5.2% in 2018.

Philippines

Malaysia

Vietnam

Indonesia

Thailand

Singapore

4Source : Trading Economics and various sources

Q1, 2017 GDP growth (%y-o-y)

Economic Indicators

CONTENTS:



- ASEAN

- By country

Demand and Supply


Conclusions

5

Apparent Steel Consumption in ASEAN (tonnes)

Source : SEAISI

ASEAN’s apparent steel consumption in 2016 increased by 12% y-o-y to 77.37 million tonnes

Vietnam registered the highest growth rate (22.4%) followed by Thailand (15.1%) and Philippines (15%). Indonesia also enjoyed high growth rate of 11.4% y-o-y.

Malaysia continued its moderate growth rate momentum at 2.3% y-o-y.

Singapore experienced a significant decline in growth rate, at -29.5% y-o-y.

2015 2016P % change

15/16

Vietnam 18,254,000 22,348,000 22.4%

Thailand 16,686,331 19,212,310 15.1%

Indonesia 11,375,467 12,673,107 11.4%

Malaysia 10,000,135 10,232,260 2.3%

Philippines 8,759,700 10,077,422 15.0%

Singapore 4,015,522 2,832,540 -29.5%

ASEAN 69,091,155 77,375,640 12.0%

6

1971 1980 1991 1992 2008 2009 2015 2016P

Indonesia ID 610,000 3,010,000 4,060,280 4,124,342 8,822,855 7,420,369 11,375,467 12,673,107

Malaysia MY 620,000 1,750,000 3,517,942 3,963,530 8,490,548 6,644,998 10,000,135 10,232,260

Philippines PH 810,000 1,280,000 1,883,236 2,013,376 3,560,267 3,517,558 8,759,700 10,077,422

Singapore SG 940,000 1,670,000 2,465,013 2,580,899 3,643,395 2,804,035 4,015,522 2,832,540

Thailand TH 800,000 1,190,000 6,236,248 7,575,822 13,465,906 10,750,482 16,686,331 19,212,310

Vietnam VN N.A. N.A. 249,000 447,936 8,183,626 10,472,399 18,254,000 22,348,000

ASEAN 3,780,000 8,900,000 18,411,719 20,705,905 46,166,597 41,609,841 69,091,155 77,375,640

Source : SEAISI

ASEAN steel consumption continues to grow healthily

Vietnam not included

N.A.

Asian financial crisis

Global financial crisis

CAGR ‘98-16

8%

7

ASEAN steel consumption still mainly served by imports

Source : SEAISI

Unit: tonnes

* Hot rolled production only

8

2015 2016P Growth (%)

Production* 28,594,234 32,356,316 13%

Import 48,745,173 53,607,356 10%

Export 8,248,253 8,588,032 4%

Consumption 69,091,155 77,375,640 12%

Apparent Steel Consumption in ASEAN (million tonnes)

Source : SEAISI

ASEAN steel consumption grew strongly in 2016, by 12% y-o-y. The region is expected to be able to maintain a steady growth rate in steel consumption of around 5-6% p.a. in the near term.

ASC is expected to surpass 80mt in 2017..

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…and surpass 90mt in 2019

Source : SEAISI

ASEAN steel consumption per capita

10

Unit: kg

CAGR 1998-

2016P

6.5%

P = PreliminaryF = Forecast

Steel consumption per capita 2013 2014 2015 2016P 2017F 2018F 2019F

Indonesia 51 51 45 49 52 55 59

Malaysia 333 328 321 323 323 322 321

Philippines 68 73 86 97 101 104 109

Singapore 792 701 725 503 502 502 502

Thailand 258 255 242 279 278 285 292

Vietnam 131 159 199 241 267 291 314

ASEAN 117 121 125 138 144 150 157

CONTENTS:



- ASEAN

- By country

Demand and Supply


Conclusions

11

Source : SEAISI

Indonesia:

Steel consumption rebounded after a sharp decline in 2015

tonnes

CAGR ‘11-16

3%

* Production of hot rolled products only

Indonesia 2015 2016P % growth '15-16

Production*

- Crude Steel 4,854,200 4,745,908 -2.2%

- Finished Steel 6,167,615 6,582,234 6.7%

Import 6,514,825 6,882,033 5.6%

Export 1,306,973 791,160 -39.5%

Consumption 11,375,467 12,673,107 11.4%

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Source : SEAISI

Malaysia:

Steel consumption growth has moderated

tonnes

CAGR ‘11-16

5.2%


Malaysia 2015 2016P % growth '15-16

Production*

- Crude Steel 3,783,572 3,200,000 -15.4%

- Finished Steel 4,226,109 3,865,000 -8.5%

Import 7,214,009 7,424,266 2.9%

Export 1,439,983 1,057,006 -26.6%

Consumption 10,000,135 10,232,260 2.3%

13

Source : SEAISI

Philippines:

Steel consumption continued to register strong growth rate and crossed 10 million tonnes in 2016

tonnes

CAGR ‘11-16

14.6%


Philippines 2015 2016P % growth '15-16

Production*

- Crude Steel 968,022 1,075,182 11.1%

- Finished Steel 4,013,251 4,746,038 18.3%

Import 4,846,449 5,431,384 12.1%

Export 100,000 100,000 0.0%

Consumption 8,759,700 10,077,422 15.0%14

Source : SEAISI

Singapore:

Steel consumption dropped sharply in 2016

tonnes

CAGR ‘11-16

-6.0%


Singapore 2015 2016P % growth '15-16

Production*

- Crude Steel 510,037 520,147 2.0%

- Finished Steel 501,221 528,453 5.4%

Import 5,101,445 4,073,297 -20.2%

Export 1,587,144 1,769,210 11.5%

Consumption 4,015,522 2,832,540 -29.5%

15

Source : SEAISI

Thailand:

After two consecutive years of decline, steel demand picked up strongly in 2016 with a growth rate of 15% y-o-y

tonnes

CAGR ‘11-16

5.7%


Thailand 2015 2016P % growth '15-16

Production*

- Crude Steel 3,717,922 3,825,120 2.9%

- Finished Steel 6,487,038 7,977,590 23.0%

Import 11,187,445 12,316,376 10.1%

Export 988,153 1,081,656 9.5%

Consumption 16,686,331 19,212,310 15.1%

16

Source : SEAISI

Vietnam:

Steel consumption continued to surge strongly in 2016

tonnes

CAGR ‘11-16

18.2%


Vietnam 2015 2016P % growth '15-16

Production*

- Crude Steel 5,647,000 7,811,000 38.3%

- Finished Steel 7,199,000 8,657,000 20.3%

Import 13,881,000 17,480,000 25.9%

Export 2,826,000 3,789,000 34.1%

Consumption 18,254,000 22,348,000 22.4%

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CONTENTS:



- ASEAN

- By country

Demand and Supply


Conclusions

18

Source : SEAISI

Finished Steel: Demand & Supply

Share of steel consumption

100%

Steel consumption (million tonnes)

19

Source : SEAISI

Finished Steel: Demand & Supply

Unit: million tonnes

* Hot rolled production only

Long steel 2015 2016P % Growth

Production* 22.27 25.83 16.0%

Import 15.72 15.08 -4.1%

Export 2.72 3.14 15.5%

Consumption 35.27 37.77 7.1%

Flat steel 2015 2016P % Growth

Production* 6.32 6.52 3.2%

Import 33.03 38.53 16.7%

Export 5.53 5.45 -1.5%

Consumption 33.82 39.61 17.1%

20

ASEAN: China is still the predominant source of steel imports

Million tonnes (otherwise stated)

Source : SEAISI

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2009 2010 2011 2012 2013 2014 2015 2016P

Total Import 33.0 39.4 42.1 50.1 54.6 57.2 61.4 69.3

- Semi-finsihed Steel 9.6 9.6 8.1 9.8 9.7 10.8 12.7 15.7

- Section, bar & wire rods 4.7 5.9 6.9 8.4 11.2 12.4 13.8 13.4

- Hot-rolled sheets & strips 9.6 11.4 13.9 16.5 17.8 18.4 19.2 22.7

- Cold-rolled products 3.7 4.7 4.9 5.2 5.1 4.9 5.0 5.5

- Coated sheets & strips 3.0 4.8 5.1 6.2 6.6 6.6 7.4 8.5

- Others 2.4 3.1 3.4 4.0 4.2 4.0 3.3 3.5

Breakdown by country

- Thailand 8.9 12.0 12.2 14.8 15.6 14.7 14.4 17.2

- Vietnam 8.5 8.0 6.8 8.0 9.2 11.7 15.8 18.7

- Indonesia 5.5 7.3 9.2 11.7 12.0 12.3 11.0 12.3

- Malaysia 3.7 5.0 4.8 5.6 6.4 7.2 7.4 8.5

- Singapore 3.7 4.0 5.2 5.2 6.0 5.2 5.1 4.1

- Philippines 2.8 3.1 3.8 4.6 5.4 6.1 7.7 8.6

Main sources of import 2009 2010 2011 2012 2013 2014 2015 2016P

- Japan 23% 28% 26% 26% 25% 23% 20% 19%

- China 13% 19% 20% 26% 30% 42% 52% 53%

- South Korea 11% 13% 16% 15% 13% 12% 10% 8%

- Russia 13% 10% 7% 8% 6% 4% 2% 3%

- Taiwan 10% 8% 8% 7% 7% 7% 6% 6%

- India 2% 1% 1% 1% 3% 1% 2% 2%

- Intra-ASEAN 10% 8% 8% 6% 5% 5% 5% 5%

ASEAN’s share of China’s global steel export continued to increase despite the slowdown in China’s steel export in 2016

Source: China’s customs

RS

LS

22

Unit: million tonnes

Steel exported from China to ASEAN shifting more towards flat steel

Source: China’s customs

China’s finished steel export to ASEAN in 2016 China’s finished steel export to ASEAN in Jan- March 2017

23

Included square bar

Included square bar

Flat Flat

Long Long

Major sources of import of long steel in ASEANMillion tonnes

Major Importers in the Region

2.97 mt

(2016)

6.3 mt

(2016)

2016

24

Source : Customs in ASEAN countries

ASEAN’s bar import

Million tonnes

Source : Customs in ASEAN countries


2016

4 mt (2016)

Out of the 8.6 million tonnes of import in 2016, it is believed

that almost 5 million tonnes constituted imports of square

bar used as billet, mainly to Philippines, Malaysia and

Vietnam

Square

bar

25

Major sources of import of flat steel in ASEANMillion tonnes


2016

4.5 mt

(2016)

18.2 mt

(2016)

26Source : Customs in ASEAN countries

Major sources of import of flat steel in ASEANMillion tonnes


2016

5.5 mt (2016)

8.5 mt

(2016)

27Source : Customs in ASEAN countries

CONTENTS:



- ASEAN

- By country

Demand and Supply


Conclusions

28


China appears to be more serious in

addressing the issue of excess steel

production capacity in the country and this is

an encouraging development for the steel

producers in ASEAN.

The recovery of steel prices in 2016 has

brought about a more stable and

sustainable operating environment for the

steelmakers in ASEAN. Many of the steel

companies are gradually returning to profit

path.

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Significant Developments (cont)

Several domestically owned steel companies in Vietnam have stepped in to

announce ambitious investment plans to expand their production capacities

in the country. Amongst them are the announcement by Hoa Sen Group of

its intention to build a large steel work in the central coastal province of Ninh

Thuan with an ultimate maximum capacity of 16 million tonnes/year and total

investment of US$ 10.6 million and Hoa Phat’s plan to construct a 4 million

tonnes/year integrated steel works in central Vietnam’s Quang Ngai involving

a total investment outlay of US$ 2.65 billion.

The much anticipated launching of the

first blast furnace of Formosa Ha Tinh

Steel Corporation in Vietnam in 2016

did not materialise. It is now expected

to fire its 4,350 cubic meter blast

furnace in early June this year.

30

Significant Developments (cont)

ASEAN might see the coming on stream of

the first fully China-owned integrated steel

works in the region this year. Alliance Steel

(M) Sdn Bhd, a joint venture between state-

owned company, Gungxi Beibu Gulf Port

International Group and privately-owned

Guangxi Shenlong Metallurgical Co. Ltd,

plans to start producing H-beams and other

long products at its 3.5 million tonnes/ year

capacity integrated mill in Kuantan, Pahang

in Peninsular Malaysia towards the end of

2017/early 2018.

31

CONTENTS:



- ASEAN

- By country

Demand and Supply


Conclusions

32

Conclusions

The ASEAN-6 continued to show strong growth

in steel demand with total apparent steel

consumption increasing 12% year-on-year in

2016 to reach 77.37 million tonnes.

The high consumption growth rate in 2016 was

propelled by the continuing expansion of steel

demand in Vietnam and Philippines as well as

the recovery in steel demand in Indonesia and

Thailand.

Going forward, ASEAN economies are expected

to see healthy growth in the near to medium term

which will further boost steel consumption in the

region.

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Conclusions (cont)

The ASEAN-6 is projected to be able to maintain a steady growth in steel

consumption of around 5%-6% per annum and total apparent steel demand is

expected to exceed 80 million tonnes in 2017 and 90 million tonnes in 2019.

Steelmaking capacity in the region is set to increase with the implementation of a

number of new steel projects over the course of the next few years. The long-

awaited commissioning of the Formosa Ha Tinh Integrated Steel Mill project, in

particular, will have significant impact on the landscape of the steel industry in

ASEAN, especially if the company is able to fully implement its investment plans.

Despite the slowdown in China’s global steel export, ASEAN continues to be the

main export destination for China’s steel exports and this remains an issue of

concern for the steelmakers in the region.

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Documents

Performance of the ASEAN Iron and Steel Industry in …seaisi.org/seaisi2017/file/file/full-paper/Session1...Performance of the ASEAN Iron and Steel Industry in 2016 and Outlook Presented