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ASEAN 6: Steel consumption inches down in 2022, what to expect in near term?

The current scenario for the ASEAN 6 countries has been stable as far as growth is concerned. The apparent steel consumption inched down to 75.1 million tonnes (mnt) in t...

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8 Jun 2023, 13:56 IST
ASEAN 6: Steel consumption inches down in 2022, what to expect in near term?

The current scenario for the ASEAN 6 countries has been stable as far as growth is concerned. The apparent steel consumption inched down to 75.1 million tonnes (mnt) in the Calendar Year, 2022, as per latest data released by South East Asia Iron and Steel Institute (SEAISI). It may be noted here that ASEAN 6 includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

But, the near future may be challenging for these countries. Governments of ASEAN 6 are optimistic for their future economic growth and targets. They are focused on limiting themselves in tourism sector, improving its domestic demand and exports and opening for the Chinese economy. Noticeable risks in this could be power in transition, weakening demand, falling prices, increasing geopolitical tensions, high inflation and interest rates, and a weakening currency.

The overall steel demand in CY'23 is projected to grow by 3.4% y-o-y to 77.6 mnt depending upon the global risks of inflation, high prices and slowing demand in China.

The major country that plays an important role in the global steel market is China that have a major impact on the ASEAN 6 countries. The new policies in 2023 on climate change and other structural shifts will have an impact on ASEAN 6's steel industry.

The policies in China are likely to lead to more offshore investments out of the country, higher quality of steel exports and more scrap generation and changes in the technologies used in making steel. Moreover, the production of steel of the ASEAN countries may increase in 2023 because the imports have increased in 2022 which could result in more exports in the coming years.

Carbon border adjustment mechanism (CBAM) will impact the ASEAN steel exports to the European Union (EU) because it faces a stiff competition from countries like China and the US.

ASEAN has set a pathway for achieving the Paris agreement targets that depends on the mitigation strategy for the steel industry that covers finance, technology and carbon pricing. The agenda is to focus on nature-based solutions.

The ASEAN producers have to keep in consideration that the coming years of steel production is focusing on continuing efforts on renewables, lower carbon inputs, energy savings, and recycling.

 

8 Jun 2023, 13:56 IST

 

 

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