Steel capacity in Southeast Asia could surge by as much as 90.8 million mt/year from current levels before 2026, a near 2.3 times spike, Yeoh Wee Jin, secretary general of South East Asia Iron & Steel Institute, or SEAISI, said May 20.

          As of 2020, the region's output stood at 71.8 million mt/year, so the projected increase could result in an overall output of 162.6 million mt/year, assuming all projects come online, he said at the Singapore Coking Coal Conference organized by S&P Global Commodity Insights.

          The output increase will center on Indonesia, Malaysia and Vietnam, Yeoh said, noting the projects are dominated by investments from China.

          One of the major projects is the China-backed Wenan Steel project, a Malaysian Ringgit 13 billion ($3.1 billion) iron and steel complex situated at Samalaju Industrial Park in Bintulu. The complex will have a 5 million mt/year steel mill, and most of its production will be exported when it starts up by end of 2024.

          Amid the increase, the capacity of hot-rolled steel products could reach 190.6 million mt/year from about 101.4 million mt/year currently, suggesting oversupply in the future and the region becoming a major exporter of steel products.

          As a result, trade flows could alter with more iron ore and coking coal bound for ASEAN, while semi-finished steel products and scrap could find their way to China as the latter shifts to "greener" steelmaking technologies such as electric-arc furnaces.

          Over January to April, China approved the construction of 16 new EAFs with a total crude steel capacity of 13.67 million mt/year, S&P Global Commodity Insights data showed.