ASEAN-6's higher steel capacity to boost iron ore demand

Substantial increments will be seen in global iron ore shipments to ASEAN-6 countries at least in the next three years, deriving from steelmakers' growing crude steel capacity through blast furnace-converter steel production, Mysteel predicts in its latest report.

Mysteel sees that the total crude steel capacity among the ASEAN-6 countries - Vietnam, Indonesia, Malaysia, Thailand, the Philippines and Singapore - will reach 140 million tonnes/year in 2026, up by a huge 55.6% from 2023.

Specifically, steelmaking capacity through the BF-converter route will increase from 2023's 42 million t/y to reach 89 million t/y in 2026. And the production volume is expected to account for 64% of the total, which is 17 percentage points higher than that in 2023 and signifies a rise in ASEAN-6's iron ore demand, according to the report.

In recent years, the Southeast Asian region, with abundant and low-cost labor and other advantages, has witnessed a surge in investments and faster industrialization driven by the continuous deepening of economic globalization and adjustments in the global industrial supply chain, leading to the consistent growth in the local steel industry, the report noted.

In fact, steel demand in the ASEAN-6 will reach 77.6 million tonnes in 2023 after the on-year rise of 3.4% - larger than that of 0.3% recorded in the prior year, South East Asia Iron and Steel Institute (SEAISI) forecasted in May.

SEAISI also pointed out that infrastructure projects in Indonesia and infrastructure and power development projects in the Philippines will be the major drivers of the growth in steel use.

Numerous steel projects have been launched in Southeast Asia in recent years, and about 15 new steel projects with a total steelmaking capacity of approximately 82.2 million t/y will be put into operation in the region in the next three to five years, according to Mysteel's statistics.

In Vietnam, Hoa Phat Group (HPG), the country's largest steelmaking group, has now been focusing on an expansion project named Dung Quat II Iron and Steel Production Complex project in the country's central Quang Ngai province, as Mysteel Global reported.

The project is planned to be completed in the first quarter of 2025 and will lift HPG's total crude steel capacity from the current 8.5 million t/y to more than 14 million t/y.

Regarding iron ore demand, the steel industry in ASEAN-6 countries relies heavily on imported iron ore, mainly from Brazil and Australia, with Malaysia, Vietnam and Indonesia being the largest ore receiver.

For example, Malaysia's iron ore imports from Brazil reached 10.6 million tonnes during the first half of this year, accounting for 6.3% of Brazil's total iron ore exports in the period, a much larger share as compared to 0.5% during the corresponding period in 2011, data by Global Trade Information Services showed.

Written by Lea Li, liye@mysteel.com and Carly Chen, chenziyi@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.