However, steel production in China has expanded even faster, pushing down prices in Southeast Asia and threatening regional competitiveness. In response, many governments are increasing trade barriers, as they look to protect their individual steel industries from a glut of competition.

Market Trends

From 2009 to 2014, the six leading countries of Southeast Asia—Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam—increased their production of hot-rolled steel products by 12.6 percent to reach 27.5 million tonnes per year.

However, the growing economies around the region meant that steel demand increased even faster. Over the same period, apparent steel consumption leapt 56.9 percent to 65.9 million tonnes. The difference was made up by imports, which nearly doubled to 46.4 million tonnes from 24.3 million tonnes.

Despite an economic slowdown affecting much of the world, the International Monetary Fund is predicting further growth for the region, expecting steel consumption to rise to 80 million tonnes by 2020.

To fill that gap, the major steel-producing economies of Korea, Japan and China have increased their exports. POSCO opened Krakatau POSCO, the first integrated steelworks in the region, in 2013, and now has production facilities and service centers in Malaysia, Vietnam, Myanmar and Thailand. As of 2014, steel companies from Korea, Japan and China comprised 80 percent of all imports to those six Southeast Asian countries.

In particular, China is making major inroads in the region, especially as its domestic economy slows and companies look to make up the difference abroad. In 2009, China comprised 12 percent of steel imports to those six Southeast Asian countries, but by 2014 that share had climbed to 42 percent.

The oversupply of steel can be seen in prices. Chinese hot-rolled coil cost $429 per tonne in early 2015, but that price fell to just $270 per tonne by October. Japanese hot-rolled coil similarly fell from $480 per tonne to $307 over the same period.

Rising Protectionism

With international steel supplies up and prices falling, Southeast Asian countries are responding by protecting their markets.

Trade barriers being enacted around the region include traditional protectionist measures (like tariffs, anti-dumping regulations and safeguards), technical barriers to trade (or TBTs) and non-tariff barriers to trade (like “Buy National” campaigns). For example, Indonesia enacted a “New Trade Law” in February 2014 that enabled the government to restrict imports of certain goods, including steel.

Anti-dumping (AD) duties and safeguard actions are especially on the rise. Over just 2013-2014, the six Southeast Asian countries took 33 anti-dumping measures, as opposed to 52 AD measures in the previous 18 years. Malaysia and Vietnam, which never took any AD measures from 1995 to 2012, took seven and four AD actions respectively from 2013-2014.

TBTs on steel imports are also tightening around the region. Indonesia requires certificates of approval to import hot-rolled, cold-rolled, coated, galvanized steel and long products, and the list is growing. Thailand, too, has made its approval process more complicated for certain imports, and Malaysia requires certificates of approval for certain steel products.

Finally, “Buy National” policies are common around the region. Indonesia changed its National Procurement Law to mandate government-procured products contain at least 40 percent domestic raw materials, while Malaysia and Brunei offer special benefits to government bodies for procuring domestic goods and services.

Uniting the Region

At the end of 2015, 10 countries in the region came together to form the ASEAN Economic Community (AEC), intending it to grow into an Asian version of the European Union. Containing 620 million people and a combined GDP of $2.5 trillion, the AEC has four major goals:11o build a single market and production base,

1. To become a highly competitive region,

2. To achieve equitable economic development, and

3. To fully integrate the region with the global economy.

4. Analysts believe that the AEC, while bringing the region closer together economically, may further strengthen protectionism against countries and companies from outside the region.

In light of these trends around Southeast Asia, experts say outside companies need to be cautious when investing in this region, and partnerships and joint ventures with local steelmakers are recommended. But with investments going on in the steel industry in Southeast Asia, particularly in Vietnam and Indonesia, soon domestic production could be on the rise, too, replacing many of the imports.

Oversaturation is always a risk, but, given the growth potential of this market, Southeast Asia is still considered a good region for investing. However, care is highly recommended, as the competitiveness of the steel market around the region is expected to rise, especially with the further development of the AEC.

Related Link:

The Future of Manufacturing in Korea

China’s Era of New Normal and its Implications on the Steel Industry

The Evolution of the Steel Production Process

The Myth and Reality of Global Steel Overcapacity

POSRI Releases First Edition of Bi-Annual English Journal “Asian Steel Watch”

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Just about everything – from the roof over your head to the device you’re reading this on – contains steel. It is one of the most commonly used materials in the world and has been for quite some time.

World crude steel production added up to about 1.662 billion tons in 2014, based on the 2014 World Crude Steel Production Performances reported by the World Steel Association (worldsteel). Yet despite these numbers, the outlook for the steel industry suggests slow growth for global steel demand, which is mostly a result of the deceleration in China and structural adjustments in most world economies.

Nevertheless, The World Steel Association’s Short Range Outlook (SRO) for 2015 and 2016 notes that even though the growth is expected to be slow, demand is still growing. They forecast that the apparent steel growth will increase by 0.5% in 2015 and 1.4% in 2016. Additionally, in developing and emerging nations, there is an increased optimism for growth, as the steel markets are beginning to exhibit the characteristics of mature markets.

For more information on The World Steel Association’s expected outcomes for 2015 and 2016, click here.

So, which countries claim the spots of the world’s top steel producers for now? Read on to find out and to learn some interesting steel-related facts about each.

5. South Korea

Crude Steel Production: 71 million tons

Interesting Fact:

Rising 270 meters above sea level, The Yi Sun-shin Bridge was opened in 2012 and links the cities of Gwangyang and Yeosu. It is the first suspension bridge to be made solely with Korean state-of-the-art technology and equipment, including 26,000 tons of steel rods and 24,000 tons of steel products. Extending 2,260 meters, it is the longest in Korea and the fourth longest in the world, surpassing even the Golden Gate Bridge. (Source: http://bit.ly/1crFdzx)

4. India

Crude Steel Production: 83.2 million tons

Interesting Fact:

The Lotus Temple, a Bahá’í House of Worship, is one of Delhi’s most iconic architectural feats and was designed in the form of a lotus flower to symbolize the religion’s cornerstones of purity and simplicity. The lotus has three sets of leaves or petals which are made out of thin concrete shells. At the top, a glass and steel roof provides protection from the elements and facilitates the entry of natural light. The temple also utilizes a number of steel reinforcements and structural steel staging. (Source: http://bit.ly/1zWQCTh)

3. United States

Crude Steel Production: 88.3 million tons

Interesting Fact:

In 1943, more than 1 billion pennies were made with steel because the United States was, at the time, engaged in World War II and copper was being rationed to make artillery. Steel pennies weigh 2.70 grams and are fairly lighter than traditional copper Lincoln pennies that weigh 3.11 grams. Today, these pennies are quite popular among coin collectors and are worth about 25-75 cents each. (Source: http://bit.ly/1cooLjx)

2. Japan

Crude Steel Production: 110.7 million tons

Interesting Fact:

Tokyo Tower, a communications and observation tower in Japan’s capital city, was built in 1958. It was constructed of steel, a third of which was scrap metal taken from 90 US tanks damaged in the Korean War. At 4,000 tons, it is significantly lighter than the Eiffel Tower, which weighs 7,000 tons, a result of exceptional advances in construction technology and steel manufacturing. (Source: http://bit.ly/1K3tHbS)

1. China

Crude Steel Production: 822.7 million tons

Interesting Fact:

The Chinese were the first people to combine carbon and iron to make steel. They’ve been making it since the first century BC in blast furnaces powered by the Asian monsoon winds. In recent years, they’ve become the world’s largest producer of steel, and consume twice as much steel as the US, Europe and Japan combined. (Source: http://bit.ly/1KzAKpG)

Production rates according to the World Steel Association (worldsteel) 2014 World Crude Steel Production Performances.

POSCO named most competitive in Global steel information provider WSD’s assessment of 36 steelmakers around the world

POSCO has been named the world’s most competitive steelmaker for the 7th consecutive time during the past five years.

Global steel information service provider World Steel Dynamics (WSD) announced the World-Class Steelmaker Rankings during the 29^th Steel Success Strategies (SSS) forum on Tuesday, June 17 New York Time.

POSCO earned high points in technological innovation and human resource management

WSD gave the top mark of 7.91 points out of 10 to POSCO. It said POSCO received highest points in four segments, including technological innovation and human resource management.

As of June 2014, WSD made an assessment of 36 steelmakers around the world in 23 categories including production size, profitability, technological innovation, cost competitiveness, cost saving, financial stability, and procurement.

WSD gave credit for POSCO’s improvement on its core steel competitiveness

WSD also gave credit for POSCO’s effort to bolster stable growth and improve core corporate competitiveness by increasing sales of value-added high-end products and engaging in technology-based solution marketing. The company got higher points compared to the previous year on technological innovation, value-added rolled steel production and doing more to bolster downstream steel-related industries.

Following second was American mini-mill steelmaker Nucor Corp. which has enjoyed shale gas development privileges along with a recent recovery in the steel industry among developed nations. Japanese steelmakers NSSMC and JFE followed third and eighth with sales rising due to increased export competitiveness under Abenomics.

Meanwhile SAIL and Jindal, Indian companies that were among the top 10 last year, failed to remain in the list this year. Instead, Hyundai Steel, which secured 24 million tons for production, ranked ninth to join the top 10.