August 2021
One of the fastest growing regions for steelmaking capacity is Southeast Asia. This expansion is being driven by the growing middle class, urbanisation, and government policies to enable domestic steelmakers to be less depended on steel imports. New steel projects in Malaysia, Philippines, and Indonesia are expected to be approximately 16.6Mt, 20.5Mt, and 27Mt, respectively.

 

Becoming a Giant

PT Dexin Steel Indonesia (DSI), located in Morowali, has ignited its second blast furnace (BF) in February 2021, to enable total crude steel capacity of 3.5Mt (Phase 1).

Further expansions, for phase 2, are due to be complete by December 2022 and will bring DSI’s crude steel capacity to 6Mt. Phase 3 will have an additional 14Mt of crude steel capacity planned, with no specified timeframe provided at this stage. The initial investment for phase 1 was US$950m and is located in the Indonesia Morowali Industrial Park (IMIP). The plant is a joint venture between Delong Steel Group, Tsingshan Holding Group, IMIP, and Hanwa. The company commenced production of steel slab in June 2021, and now produces include billet, wire rod and rebar.

 

Malaysia

In Malaysia, Hebei Xinwu’an Iron and Steel Group and Metallurgical Corporation of China (MCC), will invest approximately US$3.15bn for phase 1 of Wenan Steel project at Samalaju Industrial Park in Bintulu. The massive facility is expected to see site preparation works of the land completed by April 2022, and construction of the facility will commence shortly after. Operations are expected to commence by end of 2024, with crude steel capacity of 5Mt. Moving forward, development plans include a future expansion with production capacity to reach 10Mt.

Eastern Steel sdn. bhd (ESSB), owned by Beijing Jianlong and Hiap Venture Berhad (HTVB), currently has crude steel capacity of 0.7Mt with plans to build an integrated steel mill with capacity of 5Mt. Some projects have already started with recent testing of coke oven #3 which was successfully completed in May.

The company expects coke production capacity of 8Mt by the end of 2022. Phase 2 of construction is expected to have a further 2.3Mt, however at this stage no timeframe has been provided by the company. Meanwhile, phase 3 will increase capacity further to a total of 5Mt of crude steel production. Currently, its main production facilities have a sintering plant, iron making plant, steelmaking plant and an auxiliary plant. Its products are sold domestically and to the Southeast Asian markets.

Oriental Shield has taken over Megasteel, formerly owned by Lion Group. The plant, located in Banting, Selangor, has been mothballed since 2016. The company was planning to re-start its 3.2Mt EAF’s since 2019, however it has experienced ongoing delays due to Covid-19 outbreaks in the country. No new start-up date has been provided. Once operations commence again new expansion plans will once again be considered. Potentially, the new expansion requires invest of approximately US$726m will include blast furnace, sinter plant, coke oven, and two converters. This will have a crude steel capacity of 2.3Mt. 

 

Philippines

HBIS Group and Philippine’s SteelAsia Manufacturing formed a joint venture for a greenfield project located in Lemery, Batangas province. The first phase was going to commence in 2023 with crude steel capacity of 4.5Mt for flat steel products including hot-rolled coil. The second phase was expected to commence in 2026 with additional capacity of 3.5Mt. In appears this project in under review due to Covid-19 pandemic and no update has been provided by the companies. 

SteelAsia Manufacturing have three other projects in the Philippines, which will have a total crude steel capacity of 2.5Mt. SteelAsia Consepcion, located in Tarlac province, will be an EAF steelmaking facility with crude steel capacity of 1.2Mt for rebar and wire rod products. Expected commissioning is towards the end of 2021. SteelAsia Compostela, located in Cebu province will be an EAF with crude steel capacity of 0.8Mt, producing rebar and wire rod.

Finally, SteelAsia Lemery located in Batangas province will be an EAF integrated steel mill with crude steel capacity of 0.5Mt producing steel sections. Commissioning is expected by 2023 and will generate 1,500 new direct jobs. These projects will reduce the reliance on imports for important steel products needed for the government’s significant infrastructure program conveniently named - Build! Build! Build! 

Panhua Group from China has new greenfield project located in Misamis Oriental. The development will take place at Phividec Industrial Estate and commissioned in at three phases. The facility will have a crude steel capacity of 10Mt and approximate investment of US$3.5bn. Work commenced on the facility in 2019 and was temporarily suspended in 2020 due to the Covid-19 pandemic. 

The previous commissioning date was 2022, however, this is more likely to be push towards 2023. The first phase of construction requires 3km2 of land with up to 30k workers, with total employment reaching 50k when the third phase is completed.

The facility will produce steel slabs, and galvanised steel – including pre-painted coils, for the domestic market and export markets of Europe, US and Russia. In late 2020 equipment supplier Shaangu Group signed a supply contract agreement with Panhua Group to supply the complete set of equipment for phase 1 of the project. Reports has also been circulating that Baowu is exploring joining the Panhau Group in this investment.

 

Indonesia

POSCO and state-owned PT Krakatau Steel JV is expected to double their crude steel capacity to 6Mt from its current 3Mt. The facility commenced operations in 2013, and further expansion plans have been known to the market for some time and expect to commence in 2025. The plans include a blast furnace, sintering plant, coke oven, and plate mill. POSCO’s recent June Quarter (2021) investor presentation recognise the plant as a key growth asset, however, will focus on improving profitable and review expansion plans of up/down process.

Chinese owned Hebei Bishi Group have plans to construct an integrated steel facility in Kendal Regency, Central Java, with initial crude steel capacity of 3Mt. Unfortunately, the project was blocked in June 2019 due to Indonesian government land protection laws relating to the presence of a mangrove forest and river border protection area.

The investment of approximately US$1.5bn with Hebei Bishi Group co-operating with its partner PT Seafer Industrial Estate which has provide 7km2 of land in Patebon Subdistrict. Phase 1 of the project will include blast furnace with 3Mt crude steel capacity, a coking plant with 2.4Mt capacity a 270MW power plant, and a dock support facility with capacity of 100DWT to be built. The phase 2 expansion is expected to double crude steel capacity to 6Mt.

AME expects the timeline for all new projects will be approximately 25% complete by 2022-2024 period. Meanwhile, due to uncertainty surrounding the Covid-19 pandemic the unknown projects representing 55.5% have the potential to be either brought forward or delayed.

 

 

Gunung Group (PT Gunung Raja Paksi) has investment plans of approximately $850m for a two- stage investment process. Phase 1 involves US$370m investment to construct blast furnace with crude steel capacity 1.5Mt, and construct a new light section mill, modernise its medium section mill. This is expected to be commissioned within the next few weeks. While phase 2 of the project requires an investment of US$480m and will include the construction of a hot-strip mill, coil-slitting and cut-to-length facilities and steel pipe production facilities. Expected commissioning is 2022, with the company having additional expense savings due to import substitution.