Japanese steel-makers are expanding into high-end product markets in Southeast Asia in order to survive fierce competition with their Chinese and South Korean rivals.
Supply of ordinary steel products exceeds demand in the member economies of the Association of Southeast Asian Nations, due to massive inflows of surplus products from China, where local steel-makers have been boosting output beyond domestic consumption capacity.
According to the Japan Iron and Steel Federation, China replaced Japan as the top steel exporter to ASEAN in 2012, with Chinese products’ share in the imported steel market in the region growing to 31 percent to surpass Japanese products’ 28 percent.
Given the stepped-up exports by China as well as South Korea, which came in third with a share of 15 percent in that year, industry officials agree that steel supply in the Southeast Asia will continue to be excessive.
Concerned about the situation, JFE Holdings Inc. has postponed its decision on whether to join a Taiwanese project to make steel in Vietnam.
Still, demand for high-end steel products, mainly from automakers and electronics-makers, is robust there, industry people say, noting Japanese producers have a technical edge in the field over their Chinese and South Korean rivals.
Nippon Steel & Sumitomo Metal Corp. started production of such products in Thailand in October and in Vietnam the following month. The company also plans to launch output in India in January and expand production lines in China in 2015.
JFE began to produce high-end products in Thailand last April and is preparing to do so in Indonesia in March 2016.
Kobe Steel Ltd. plans to start making high-intensity products in China in early 2016.
Chinese makers, too, are now targeting the high-end product market. They are constructing state-of-the-art plants in southern China with a view to starting output in 2016-2017, according to industry officials.