Steel Scrap is Critical to ASEAN Steel Industry
The South East Asia Iron and Steel Institute in a latest report said that ASEAN-7 countries exported about 1.20 million tonnes of ferrous scrap, down by
The South East Asia Iron and Steel Institute in a latest report said that ASEAN-7 countries exported about 1.20 million tonnes of ferrous scrap, down by 46.8% YoY. The top 3 exporting countries were Singapore, Malaysia and Thailand. 31.4% of the export has gone to India and 20.3 % to Indonesia. Other smaller countries in the APAC and ASEAN too have sourced the material for its steelmaking facilities due to their limited domestic scrap availability. The declined in export was caused by a slower activity in the recycling of ferrous scrap as well as lower demand for the raw material from the smaller steelmaking mills during the pandemic lockdown.
Based on estimates, local generation of ferrous scrap in the ASEAN-7 region is enough only to feed about half to its local requirements. All of the countries do not have enough supply of local ferrous scrap to meet the demand and therefore need to source the critical materials from outside of the region. In January-November 2020, the ASEAN-7 steel industry imported 6.04 million tonne of ferrous steel, lower compare to the import in January-November 2019 which was about 8.65 million tonnes, mostly from Japan 40.1%, USA 18.1% and Australia 9.2%.
Vietnam has been the biggest consumer of Japanese scrap among the ASEAN-7 countries, importing 39.5% of the total scrap imports. Vietnam’s effective response to the pandemic and early easing of restriction in construction activities has driven the country’s demand for steel. Beside its current steelmaking capacities, new investments planned are starting to take place, and that demands for a steady supply of ferrous scrap. In addition, Vietnam production of steel picked up because it took the opportunities to sell more semifinished steel to China in the previous 2 years.
The quantity of ferrous scrap that moved into Malaysia is particularly noteworthy. Malaysia maintained the import volume at around 1.20-1.30 million MT for 2019 and 2020 for its ironmaking and steelmaking operations despite its economy being in the recovery stage. This represents a stable demand for ferrous scrap for these 2 years of production particularly in semifinished and long products to meet the drastic spike of export to China as a substitute to the lower local demand.