Asia accounts for a large part of total global steel production. As its populations and economies continue to rise, the structural changes in society and the market, and their relationships with other nations significantly impact the steel industry. To combat these rising needs, countries have also expanded into the global market with differentiated export strategies to increase their shares.
The pandemic did hammer steel demand in much of the world, leaving many to pull back in a bid to survive. However, as the economic climate is changing once again with the progressive rollout of vaccinations ,we see many upcoming opportunities in the Asian Steel Industry. For starters, frontrunners such as China are making some changes to strengthen their industry.
A major change that the Chinese steel market has adopted recently would be their cancellation of export tax rebates. As of May 2021, they announced the removal of VAT rebates on exports of 146 steel products. This move had been widely anticipated by steelmakers globally as it aligned with a time when China’s crude steel output reached the second-highest in history. The tax adjustments are aimed at reducing import costs and expanding imports of steel resources.
Due to this change, Chinese steel mills that rely heavily on export revenue will turn to domestic opportunities for revenue. On the other hand, ASEAN steel mills that were previously affected by strong competition from Chinese steel mills are now in a better position to yield higher margins and market share domestically and globally. Chinese steel mills will also look to partner with other regional players – this places appeal on Indonesian steel mills and bodes well for other steel mills in Asia. The implementation of this change will promote the transformation and upgrading of the steel industry in the region.
In the upcoming months or years, there will be immense opportunities for Indonesian steel mills as we see an increase in export sales, on top of domestic sales. Indonesia is growing as a steel producer, and as the country continues to be driven by the huge capacities commissioned by Chinese companies, it is set to overtake India as the second largest stainless-steel producer in the world. It truly projects how Indonesia has been fulfilling and catering to the rising demands of both the domestic and international markets.
Going forward, Indonesia is an excellent place to satisfy the gaps in demand and supply because of its close proximity to the market as well as our long-standing partnership. In the years ahead, steel demand is expected to rise strongly in Indonesia on the back of construction and infrastructure imports.
Moving forward, the world’s infrastructure players and developers will move towards green metal by pressuring steel suppliers to be “green certified”. Steel is at the core of a green economy, in which economic growth and environmental responsibility work hand in hand. Jumping on the green initiative as soon as possible ensures that your steel mill or company will command premiums in the market.
Sustainable development must meet the needs of the present without compromising the ability of future generations to meet their own needs. A green economy delivers prosperity for all nations, while preserving and enhancing the planet’s resources. Furthermore, steel mills with upcoming plans or have pledged to go carbon neutral will be taken seriously by Chinese steel mills.
Paving the way for other steelmakers in Asia is Gunung Raja Paksi (GRP), which is currently planning to kickstart green initiatives while encouraging businesses regionally and globally to follow suit. This is the best time for steel businesses and Asian steel companies to grow, do not miss out.