2011-12_ a difficult period for Malaysian steel industry

 

The global steel industry continued to face a challenging period in 2011-12, arising from higher input costs and an increasingly adverse external environment. Global steel demand softened while raw material prices remained volatile. In line with tough market conditions, Malaysia’s steel consumption decreased slightly to 8.2mn tonnes in 2011. Meanwhile, crude steel production grew at a lower rate of 4.3% to 5.9mn tonnes in 2011.

In Malaysia, the steel industry was further affected by the influx of imported steel products which tend to reduce market prices. Under these unfavourable competitive conditions, performances of steel companies generally declined. Nevertheless, most companies managed to increase sales volume but with much reduced profits.

According to the Malaysian Iron and Steel Industry Federation (MISIF), the domestic steel industry, in consumption terms, will grow at a rate of 2–4% in 2012-13. More demand for domestic steel products is expected with the stepping up of the implementation of various mega-projects under the government’s Economic Transformation Programme (ETP).

Salient points 

• In line with the unfavourable global economic situation, Malaysia’s total steel demand was 8.2mn tonnes while crude steel output reached 5.9mn tonnes in 2011. 
• The performance of the local steel industry in 2012-13 will depend mainly on the rate of construction projects implemented under the government’s ETP. The MISIF expects domestic steel demand to reach 8.4mn tonnes this year. 
• Due to the scale of China’s production and Malaysia’s progressive liberalisation policy, local steel players fear that an influx of imported steel products into Malaysia would continue to exert pressure on prices and margins.

Source: South East Asia Iron and Steel Institute (SEAISI)

Much more in the Intellinews report: Malaysia Steel Industry Report

 

Flood disaster in Thailand landed steel industry in troubled waters

The global steel industry was faced with many challenges in 2011 and H1/2012, arising from an adverse external environment, soft international steel demand and volatile raw material prices. Thailand was hit hard from both global economic uncertainty and local massive flooding, causing the GDP y/y growth in 2011 to drop a mere 0.1% compared to the plan of 4.5%. Overall, the country’s steel production and exports declined significantly as the floods disrupted supply chains and operations in Q4/2011.

Domestic steel consumption increased by 3.3% y/y to 14.5mn tonnes in 2011, much lower than the 31% increase in 2010. The Iron and Steel Institute of Thailand (ISIT) estimated that steel consumption in 2012 would grow by at least 5%, driven by post-flood reconstruction spending from both the public and private sectors. The growth in the demand for steel would also be supported by a significant expansion in the automotive and electronic industries.

Many domestic steel companies were badly affected by the severe floods and global economic slowdown, which eroded their operating margins. Going forward, more resilience in operating results is expected as plants resume production to normal levels and sale volume increases.

Prominent Points

• Thailand’s steel consumption registered a slower growth of 3.3% to 14.5mn tonnes in 2011, accounting for the largest share (28%) among the ASEAN countries.
• Domestic production of finished steel products fell by 6.7% to 9.3mn tonnes in 2011 as a result of the devastating floods.
• Thailand should see a 4.5–5.5% GDP growth in 2012 attributed to the government’s income generating policies and recovery in the industrial production sector after the floods.

Source: SEAISI

These are only a few of the insights in the new EMD Report : Thailand Steel Industry. Learn more and purchase now>>

 

Indonesia’s steel industry growing strong

Indonesia’s steel consumption grew robustly by 22.4% y/y to 10.95mn metric tonnes in 2011 in line with the growth in domestic steel demand. As the country with the largest economy and highest population in ASEAN, its share of steel consumption reached 20.9% making it the top second steel consuming country in the region.

With about 300 domestic players, the steel industry of Indonesia employs more than 500,000 people and is capable of producing 5.5mn tonnes of total steel products annually including hot-rolled steel products (bars, wire rods and plates) and crude steel products (billet and slab). And more production is expected in the coming years.

Salient points 

• The significant increase in Indonesia’s steel consumption in 2011 was supported more by import, which was 32% higher than the 2007 level, and not from domestic production. 
• The country’s domestic steel production increased 4.5% y/y to 5.45mn tonnes in 2011. Bars and wire rods are the primary steel products and account for the largest annual production output of the industry. 
• The gross domestic product (GDP) of the Indonesian iron and basic steel industry increased 3.4% y/y to IDR 8.0tn in Q2/2012.

Much more in the Emerging Markets Direct report: Indonesia Steel Industry 1H12