2016 SEAISI Conference & Exhibition:
ASEAN Steel Industry Quite Different From The World
Roberto Cola, SteelAsia Vice President and Chairman, South East Asian Iron and Steel Institute (SEAISI)
Once again, steel industry players from the ASEAN region gathered at the South East Asian Iron and Steel Institute Conference and Exhibition. The 2016 edition ran from 30 May – 02 June in Hanoi, Vietnam.
Roberto Cola, SEAISI Chairman delivered the Opening Address. Cola, who is also the Vice President of SteelAsia Manufacturing Corporation, highlighted the growth prospects of the steel industry in the region, despite the gloomy picture in the rest of the world. The following is the full text of his speech:
Opening Address: 2016 South East Asia Iron and Steel Institute (SEAISI) Conference & Exhibition in Hanoi, Vietnam
Roberto M. Cola, Chairman, SEAISI
His Excellency Mr. Cao Quoc Hung Vice Minister of the Ministry of Industry & Trade of Vietnam
Mr. Chen Yuan-Cheng, Chairman of Formosa Ha Tinh Steel Corp.
Mr. Nghiem Xuan Da, General Director of Vietnam Steel Corp.
Members of the Board of SEA Iron & Steel Institute or SEAISI,
Mr. Tan Ah Yong, Secretary General of SEAISI,
Distinguished guests, speakers & delegates,
On behalf of the Board of Directors of Southeast Asia Iron & Steel Institute, it is my great pleasure to welcome all of you to the 2016 SEAISI Conference & Exhibition in Hanoi, Vietnam.
At the outset, I would like to thank His Excellency Vice Minister Cao Quoc Hung, for his presence here to deliver the Ministerial Address and officiate the official opening of this conference. My gratitude also goes to our two keynote speakers Mr. Chen Yuan-Cheng and Mr. Nghiem Xuan Da for allocating part of their busy schedule to speak in our conference today. I also wish to convey our appreciation to Vietnam Steel Association led by Mr. Chu Duc Khai, Vice Chairman and General Secretary for their excellent support and cooperation in co-hosting this year’s event.
Ladies and gentlemen,
In the last couple of months, our industry has become very political and emotional all over the world. The global excess steel capacity is now seriously affecting the viability of the biggest and venerable steel companies of the world. The World Steel Association is forecasting a decrease in world steel demand by 0.8 % for 2016 following a contraction of 3% in 2015. China’s claim that it be granted market economy status in December this year after its 15 year accession to the World Trade Organization (WTO) adds further anxiety in the steel industry, especially in the European Union and North America. This situation is being written about in many international publications and played out by major TV networks painting a very gloomy picture of the world steel industry.
But, the situation in the ASEAN is quite different from the world. In 2015 ASEAN steel consumption increased by 7% year on year reaching 70 million tons. Steel demand is also projected to grow by 5% in 2016. While the European Union and North America fears the WTO recognition of China as a Market Economy, the ASEAN has implicitly granted this status to China by virtue of the ASEAN China Free Trade Agreement which came into effect on January 1, 2010. The ASEAN-China Free Trade Agreement brought about the bizarre and bittersweet situation where the ASEAN steel manufacturers are cutting production volumes in a growing ASEAN steel market. Obviously this is not sustainable and we are now seeing a rapid increase in trade remedy measures and technical barriers initiated by ASEAN countries. The governments of ASEAN nations are now starting to realize that the fledging steel industry in their respective countries will be decimated if they remain passive in a raging sea of controversial steel trades.
On the subject of trade, the recently launched ASEAN Economic Community (AEC) and One Belt One Road (OBOR) Initiative of China will bring new challenges as well as opportunities to the ASEAN steel industry. AEC will bring about a freer flow of goods, services and investments in ASEAN which could drive steel demand growth further. AEC will also provide the impetus for ASEAN steel companies to secure their upstream source of slabs, billets and blooms via the state of the art Blast Furnace process. This is to address the incongruity in the ASEAN steel industry which relies heavily on the Electric Arc Furnace route for steel production. Indonesia and Vietnam who already have their modern Blast Furnaces are well positioned to take advantage of this opportunity. They now possess the capability to produce higher value steel products required by the automotive, appliance, shipbuilding and electrical industries. I am happy to note that these Blast Furnaces in Indonesia and Vietnam are the products of close collaboration among SEAISI member companies from Japan, South Korea and Taiwan. This is indeed a significant milestone for SEAISI which will celebrate its 45’th Anniversary this year.
Although still on the infancy stage, China’s One Belt, One Road (OBOR) initiative will have a big impact on the steel industries in ASEAN. Intensification of infrastructure construction activities will lead to an increase in steel consumption in the region. How the ASEAN governments can help their steel companies participate and benefit from the construction of these infrastructures needs to be planned and worked out now. The OBOR initiative will also push the major steel producing companies in China to explore investment opportunities in the ASEAN region. This will create good prospects for joint ventures which can help elevate the competitiveness of ASEAN steel manufacturing companies to a higher level. But I want to give caution to the steel manufacturers that traders and importers are already positioning themselves to benefit from OBOR. Like hunters of old who look for a good game to catch, they look for good deals to import into their countries. There will be a heightened competition between manufacturers and importers in the domestic steel market of ASEAN countries.
In this conference and exhibition we will be discussing about Innovating and Sustaining Competitveness in ASEAN Iron & Steel industry. While I likened the traders and importers to the hunters, manufacturers are like farmers. They invest in land, equipment, technologies and people to survive and grow. Like farmers, manufacturers toil in their plants from sunrise to sunset and provide meaningful work to thousands of people compared to a handful of people employed in trading and importing. In the next three days we will learn and share new technologies, equipment and best practices with each other in order to improve our competitiveness. The plant tours on Thursday will showcase Vietnam’s steel “farms” composed of manufacturing plants and steel using companies who have invested in innovative and sustainable technologies. These companies have recognized and believed that there are opportunities in the ASEAN steel market even in this era of excessive capacity surplus. They have taken the long term view that ASEAN market will continue to have a healthy growth amidst the prevailing pessimism of the world steel industry.
Ladies and gentlemen,
While we are here to listen and discuss serious industry and business matters, let us also make use of this conference to renew old acquaintances and cement new friendships. As I already mentioned, SEAISI will be celebrating its 45’th Anniversary this year and SEAISI has thrived because of the spirit of friendship and goodwill. It is my fervent hope that this spirit will continue to flourish well into the future.Finally, we would like to convey our profound gratitude to all the exhibitors, advertisers, speakers and delegates. We have set a new record in terms of attendance in this conference. I wish you all a productive and enjoyable stay in Hanoi and hope to see you again in Singapore next year. Thank you & good morning!