Posted on 05 Jun 2014
The Southeast Asian iron and steel industry could look into the production of niche products as a long-term approach to staying on top of the competition.
Chow Chong Long, chairman of the South East Asian Iron and Steel Institute (Seaisi), made this suggestion in his opening speech on Monday May 26 at a steel conference organised by the group in Kuala Lumpur.
The industry should avoid investing in areas that already suffer from overcapacity, especially the production of low-end products, and move towards producing higher-end ones instead, he told delegates.
Solving the problem of unfair competition from cheap imports will definitely help strengthen the position of the iron and steel industry in the Assn of Southeast Asian Nations (Asean) region, but this is only a short-term solution, he said.
"To progress into the next decade, the industry needs to take a long-term approach," he said.
The industry could perhaps look into adopting innovative processes to reduce overall costs and improve quality. It should leverage on the technical expertise of supporting member countries of Seaisi through joint ventures or technical collaborations to enhance product quality and market acceptance, and enhance intra-Asean steel trade, which is not only low but also shrinking over the years, he said.
While Asean's steel consumption is growing rapidly, steel producers in the region are unable to benefit from the increase in demand due to intense competition from cheap imports, particularly from China. As a result, average steel capacity utilisation in Asean is only around 50%, against the global average of about 80%, he noted.
"The issue relating to the export of boron-added steel from China is now well known.
"While we can understand the logic of the Chinese government in wanting to make use of its tax rebate structure to encourage the exports of high-value-added steel products, we are against the practice of the Chinese exporters in manipulating the loopholes in tax structure to benefit from the tax rebate and bring out low value-added steel products at low export prices," he said.
Chow said regional steel producers, through the Asean Iron & Steel Council (ASIC), have taken up the issue with its counterpart in China - the China Iron and Steel Assn (Cisa).
The council has brought up the problem to the Asean Secretariat, while its individual members have also approached their respective governments over it.
"We recognise that we cannot move against the tide of free trade but what we are seeking for is fair trade and a level playing field. We, therefore, hope that the individual governments in this region will step in to help resolve this issue soon," he said.
