World Major Steels Expand Investment in ASEAN

World major steel makers focus the investment in Southeast Asian countries. World largest maker of Arcelor Mittal agreed to purchase 40% share in Thai flat steel maker, G Steel. POSCO of South Korea and Krakatau Steel of Indonesia started construction of joint integrated steel plant. JFE Steel decided to build Thai hot dip galvanizing steel plant and Kobe Steel decided to build Vietnamese steel plant. World major steel makers try to enter as strategic area in Southeast Asian countries with growing demand and better investment condition.

Many steel investment projects were canceled in Southeast Asia after Lehman shock. After the severe period, many steel makers restarted investment in the area since 2010. Taiwanese Formosa Plastics started to build integrated steel plant in Vietnam. Kobe Steel invests around 130 billion yen in Vietnam to complete new iron making process of ITmk3 plant with port facility by 2013. Nippon Steel and JFE Steel build steel pipe pile plants in Vietnam to follow growing infrastructure demand in Association of Southeast Asian Nations and Australia.

Arcelor Mittal provides US$ 500 million of money to ailing G Steel to establish the first flat steel base in Southeast Asia through the company. JFE Steel started the construction of 24 billion yen automotive grade hot dip galvanizing steel plant in Thailand to start the operation in 2013 in order to follow growing automobile demand in the country. Thai largest hot rolled flat steel maker, Sahaviriya Steel Industries purchased UK integrated steel plant from Tata Steel Europe to establish integrated operation from iron making to flat steel.

ASEAN 6 major countries’ steel consumption was 46.16 million tonnes in peak of 2008, which was 1.7 times of 2000 level. The consumption in Thailand and Vietnam was higher in 2010 than 2008 level due to major investment by offshore manufacturers including automakers and appliances makers.

ASEAN Free Trade Area removes tariff in the area encouraging free trade and business expansion. Major steel makers try to build supply base in the area to follow growing demand in the area and neighboring areas.