UNUnited Nations Economic Commission for Europe

Press Releases 1998

[Index]

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.