Huge investments in new ones are being made in steel projects despite Covid - 19

The Southeast Asian Iron and Steel Institute (SEAISI) warned that large investments by regional steel producers in new steel projects could lead to a potential overcapacity situation.

According to the association, there has been a significant increase in investment in converter steel mills in the region, which are mostly funded by Chinese steelmakers and bankers. The forthcoming production capacity in the ASEAN region is likely to exacerbate the problem of overcapacity in the region.

Chinese steel companies have invested up to 50 million metric tons of production facilities in several countries in the ASEAN region. Investments by international companies in partnership with local firms will add an additional 100 million metric tons of steel production. This will increase the region's overall excess capacity to over 60 million metric tons. SEAISI notes that it will take almost 20 years for demand for them to reach this level of capacity.

The overcapacity situation will lead to serious competition in the industry. As a result, local steel producers could face serious financial losses, threatening the sustainability of the steel industry in the region.