WORLD STEEL INDUSTRY GAINS
FROM ASIA'S FINANCIAL CRISIS
30 June 1998
The world steel industry can look forward to a positive
spin-off from the Asian financial crisis. In Asia, installation
of new crude steel-making capacity is slowing down markedly. With
major steel projects already postponed or cancelled, capacity
build-up from 1997 - 2000 will be around 37% less than had been
forecast for 1996 - 1999, and will not exceed 56 million tonnes,
32.7 Mt less than previously forecast. These exciting figures are
revealed in The Steel Market in 1997 and Prospects for
19981/, the annual steel market review of
the United Nations Economic Commission for Europe (UN/ECE).
Based on a survey of the four-year period 1997 - 2000, the
UN/ECE review concludes that total new crude steel-making
capacity in North America and Asia should reach a maximum of 56.0
Mt: 9.0 Mt in North America and 47.0 Mt in Asia. Of that amount,
new electric arc furnace (EAF) capacity is expected to account
for 35.6 Mt: 9.0 Mt in North America and 26.6 Mt in Asia. Last
year=s forecast was for a huge 88.7 Mt increase in North America
and Asia in the four-year period from 1996 to 1999: 17.4 Mt in
North America and 70.3 Mt in Asia2/.
In the Republic of Korea, Hyundai has cancelled a plan
to construct a greenfield integrated steelworks with a capacity
of 6 Mt in Handong. Posco is planning to suspend its No. 2
mini-mill with a capacity of 2 Mt and to sell its No. 1
mini-mill, with the same capacity as No. 2, which was
commissioned in 1996 at Kwangyang.
In Thailand, Thai Special Steel Industry (TSSI)
suspended its plan for the new steelworks based on the blast
furnace/basic oxygen furnace (BF/BOF) route with a capacity of 3
million tonnes. The Sahabiria Group's expansion plan to construct
a direct reduced iron (DRI) plant and a hot-strip mill with a
capacity of 2.0 Mt was also suspended.
In Malaysia, the Government cancelled its plan to
construct a 3.0 Mt BF/BOF greenfield steelworks.
In Indonesia, the country's first thin slab continuous
caster which is to be installed by the joint venture between
Krakatau and Posco will be delayed. Gunawan is planning to
commission a steelworks in East Java, with a capacity of 2
million tonnes. Bakrie is planning to commission a US$ 500
million mini-mill plant in Sumatra. Both plans are likely to be
suspended or cancelled.
In India the steel industry has been facing weakening
steel demand, with declining steel prices, since 1996. Fears of
overcapacity, resulting from new ambitious projects to construct
steelworks, caused a number of projects to be postponed or
delayed indefinitely in 1997: such as Tisco's Gopalpur project,
Nagarjuna's plan to construct steelworks by purchasing secondhand
BF/BOF facilities, and the projects of Mukand and Rashtriya Ispat
Nigam Ltd.
The United States, on the other hand, has continued to
install new facilities on the back of good steel demand. The
country's buoyant financial markets also lent support to raise
funds for the projects. Steel Dynamics is proceeding with its
second expansion plan, adding a capacity of 1 Mt. Chaparral is
due to construct near-net-shape casting with a capacity of 1 Mt.
Numerous other projects are under way to install cold rolled
mills, section mills, plate mills and hot-dipped galvanized
lines. Hot-dipped galvanized sheet is aimed at the automobile
sector and the country's rapidly growing steel house framing
sector.
For further information, please contact:
Mr. Akio Noguchi
Trade Division
United Nations Economic Commission for Europe
Palais des Nations
CH - 1211 Geneva 10, Switzerland
Tel: (+41 22) 917 21 49
Fax: (+41 22) 917 01 78
E-mail: [email protected]
____________
Notes:
1/ United Nations Economic Commission
for Europe, The Steel Market in 1997 and Prospects for 1998 (United Nations publication, Sales No. E.98.II.E.19).
2/ United Nations Economic Commission
for Europe, The Steel Market in 1996 and Prospects for 1997 (United Nations publication, Sales No.E.97.II.E.13).
Table *
New crude steel-making
capacity in NAFTA and Asia between 1997 and 2000 (incl.)
(Thousands of tonnes)
|
1997 |
1998 |
1999/2000 |
Total (1997 to 2000) |
United States
Mexico |
4,700
(4,700) |
500
(500)
750
(750) |
2,000
(2,000)
1,000
(1,000) |
7,200
(7,200)
1,750
(1,750) |
Total NAFTA |
4,700
(4,700) |
1,250
(1,250) |
3,000
(3,000) |
8,950
(8,950) |
India
Korea
(Rep.)
Malaysia
Taiwan
Province of China
Thailand
China
Others |
2,100
(0)
2,000
(2,000)
0
(0)
500
(500)
700
(700)
4,000
(2,000)
1,000
(1,000) |
4,000
(1,200)
0
(0)
4,100
(4,100)
1,500
(1,500)
2,400
(2,400)
6,500
(1,000)
1,000
(1,000) |
2,800
(1,800)
3,000
(0)
600
(600)
1,000
(1,000)
1,800
(1,800)
6,000
(2,000)
2,000
(2,000) |
8,900
(3,000)
5,000
(2,000)
4,700
(4,700)
3,000
(3,000)
4,900
(4,900)
16,500
(5,000)
4,000
(4,000) |
Total Asia |
10,300
(6,200) |
19,500
(11,200) |
17,200
(9,200) |
47,000
(26,600) |
Total NAFTA
and
Asia |
15,000
(10,900) |
20,750
(12,450) |
20,200
(12,200) |
55,950
(35,550) |
Note:
Figures in parentheses indicate capacity by EAFs.
All figures are
estimated by the UN/ECE secretariat.
* The
Steel Market in 1997 and Prospects for 1998, table 4.1.