STEEL CONSUMPTION in Southeast Asia’s six biggest economies is estimated to have declined as much as 8.7% last year due to pandemic-driven lockdowns, and prospects for a quick rebound remain clouded, an industry group said on Thursday.
As the economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam were hit hard by the global health crisis, the region’s steel consumption likely slumped to between 73.3 million tons and 75.3 million tons, according to the South East Asia Iron and Steel Institute (SEAISI).
The estimates are 6.2%-8.7% lower than the 2019 volume, it said in a report.
Construction activity, traditionally the main driver of steel demand in the region, was disrupted in Indonesia, Malaysia and the Philippines. In contrast, Vietnam was able to expand in the sector, having been able to quickly curb the coronavirus spread, the group said.
Thailand has also taken immediate action by boldly driving the demand for construction in the second and third quarters, it said.
The automotive industry was also a “major victim” among the region’s steel consumers, with the largest producing countries Thailand, Indonesia and Malaysia severely hit, while the manufacturing sector also took heavy blows, it said.
But not all is bad during the economic downturn, as the region’s steel producers opted to boost exports to countries that had controlled the pandemic and restarted their economies much earlier, notably China, while domestic demand remains sluggish.
Southeast Asia’s steel exports jumped 27% to 9.3 million tons in the first half of 2020 from a year earlier, according to SEAISI.
With COVID-19 restrictions still in place, the group said activity in the region’s construction sector and infrastructure expansion remains limited.
“With collapsing domestic demand for steel, steel industries are facing the urgent need for new market opportunities outside the region to withstand the economic downturn,” the group said. — Reuters