Asian Steel Trade Faces Multiple Challenges

Asian Steel Trade Faces Multiple Challenges

Weak domestic demand and trade friction are important challenges facing the development of the current steel industry, and the abuse of trade protection measures is bringing many negative effects. At present, the biggest problem faced in the Korean steel industry is that steel consumption has stagnated. Besides the poor performance of downstream industries such as domestic appliances, automobiles and ships, which restricts steel demand growth. The trade restrictions adopted by the United States have also caused a significant drop in the export of steel products to the US market this year. This poses more challenges for Korean steel companies that expect to export their digestion capacity. At the same time, due to insufficient domestic demand and export volatility, South Korea’s imports of steel products from Japan and China are also decreasing this year.

Steel consumption in Taiwan is mainly for the construction, manufacturing and export of the island. Demand for steel in construction and manufacturing has been saturated and has been slowly declining over the past 20 years, and new production in the later stages need exports to digest. Taiwan’s steel exports are mainly galvanized coils, hot rolled steel plateand cold rolled steel plate. Faced with the challenges of current industrial structure, steel trade barriers and strong environmental protection requirements, the steel industry structure needs integration and upgrade. We should produce innovative materials, add process technology processing and design to increase the added value of products, enhance competitiveness, and strengthen the exchanges with the industry in various regions to jointly prevent the occurrence and upgrading of trade friction.

Indonesia’s economic growth is relatively good. Steel demand is expected to remain at a high level, and the current low per capita consumption of steel in Indonesia also indicates that it has huge market potential. In view of the growing domestic demand, some steel companies want to increase production capacity. However, there are almost no upstream plate suppliers in Indonesia, and local billet demand is more dependent on imports. At the same time, the supply and demand gap of many steel products is large, and it needs to be supplemented by imports. This has provided more trading opportunities for the market.

For the development of China’s steel market, this year, the normalization of environmental protection and production limits have led to a year-on-year decline in steel production. The strong resilience of China’s economy has ensured the smooth operation of domestic steel consumption, making the overall spot price of China’s steel stock market at a high level. Profits remain high. The Chinese government believes that we should focus on four aspects, namely environmental protection, demand, trade friction, and capacity. In the past three years, China has basically completed the task of de-capacity of 150 million tons of hot rolled steel plates. In the future, it will mainly control steel production capacity through reduction and replacement. However, as China’s environmental protection continues to increase, the environmental protection of the steel industry will become the norm. On the demand side, there are signs of weak demand in China’s major downstream industries. At the same time, the trade friction between China and US may also indirectly affect China’s steel demand.

Data show that since 2016, China’s steel exports have continued to decline, but this year’s export prices have an upward trend. In this context, the stability of the trade order in the Asia-Pacific region is critical to the global market. To this end, China, Japan and South Korea should adhere to the principle of openness and fairness, maintain trade order, jointly deal with the abuse of rules to excessively protect the market, and safeguard the hard-won stable development of the global steel market.