What to expect at the SEAISI conference next week

Rising costs of production and the ramping-up of steel exports from China are intensifying concerns among steelmakers in Southeast Asia, amid falling margins and corporate losses.

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Only a handful of steel companies in the region made a profit last year. Even then, profits were only marginal, while a number of larger steel mills in the region are in financial difficulties.

This year, sharp increases in energy tariffs in Malaysia and Indonesia are expected to exacerbate the problems faced by steel producers in those countries, as energy accounts for a significant proportion of the cost of steel production.

In steelmaking, energy costs could constitute as much as 40% of operational expenses in some countries.

These topics are likely to dominate discussions at an industry gathering organised by the South East Asia Iron & Steel Institute (SEAISI) in Kuala Lumpur, Malaysia, next week.

More than 450 delegates from some 25 countries are expected to attend the four-day event, which will begin on Monday May 26.

For the first two months of this year, steel exports from China were up by about 26% year-on-year. So some are already expecting statistics from the conference to show even higher import figures in the Assn of South East Asia Nations (Asean) region this year against those of last year.

“I expect the statistics will show us a further downtrend in Asean production and a further dramatic uptick in imports from China – some of which are illegal, such as the square bar-billet flows to the Philippines,” said a senior executive with a global steel and metal manufacturer who will be attending the event.

He was referring to Chinese billet being described as “square bars” when they are exported out of China, so as to evade the country’s high export tax.

“In this light, I’ll be hoping for some clues toward understanding what SEAISI’s respective national bodies intend to do about Chinese imports. Will Asean nations let their steel industries die, or will they finally take action?” he added.

Of interest to many delegates will be the country reports from SEAISI member states Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, supporting member countries Australia, South Korea and Taiwan, in which representatives will give updates on their domestic iron and steel situations.

Hiroshi Tomono, chairman of the Japan Iron & Steel Federation, will deliver the keynote speech.

“He will be touching on the theme – Strengthening the Iron and Steel Industry in Asean – on how to ensure continued growth, which should provide some interesting pointers for the industry,” SEAISI secretary-general Tan Ah Yong told Steel First.

Tomono is also representative director and vice-chairman of the world’s third-largest steelmaker, Nippon Steel & Sumitomo Metal Corp (NSSMC).

It has been many years since SEAISI has had a keynote speaker from Japan, according to Tan, although the Japanese steel companies have been actively involved in the group’s activities since it was established in 1971.

The keynote speech will be followed by a discussion among chief executives, with panel members comprising Tomono; Jo-Chi Tsou, chairman of China Steel Corp; Chow Chong Long, group md of Southern Steel Berhad; Vivek Kamra, president and ceo of Natsteel Holdings; and Irvan Hakim, president director of PT Krakatau Steel.

Other speakers at the event will include representatives from the World Steel Assn, India’s Ministry of Steel, the Singapore Exchange and Metal Bulletin Research.

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