【SMM Steel】Why Import Amid Overcapacity? Unpacking the ASEAN Steel Dilemma (Part 1)

Southeast Asia's steel market is transforming from an import-dependent region into a self-sufficient supply base. While the region still imports high-grade steel for advanced manufacturing, its exports of carbon and stainless steel are growing rapidly. Market prices, though still influenced by China, are increasingly driven by local capacity and competition. The market now faces structural overcapacity, making future success dependent on mastering cost control, quality production, and green technology.

The World Trade Organization (WTO) panel, in its DS616 ruling announced on October 2, 2025, found the European Union (EU) to be in violation of key provisions concerning its anti-subsidy duties on Indonesian cold-rolled stainless steel. On the surface, this represents a significant triumph for Indonesia in a traditional trade dispute. However, we view the win as a "Pyrrhic Victory": the ruling’s benefits are immediately nullified by procedural obstacles, and the entire episode is overshadowed by the imminent structural shock of the Carbon Border Adjustment Mechanism (CBAM). This is not the end of a trade era, but the dawn of a far more challenging one.

The Southeast Asian steel industry stands at a critical historical juncture. On one hand, the region is experiencing an unprecedented wave of capacity expansion, with Chinese capital-driven investments planning to add over 100 million mt of new capacity, and a duopoly between Vietnam and Indonesia has already taken shape. On the other hand, the EU carbon border tax and global decarbonization requirements are compelling industry to undergo a green transformation, posing severe challenges to traditional development models. Key trends indicate that a capacity race and green transformation are advancing in tandem; regional supply chains are being restructured, with self-sufficiency rates increasing, yet high-end products still rely on imports; national infrastructure projects provide solid support for demand, but the risk of overcapacity cannot be ignored. The key to future competition lies in balancing scale expansion with quality improvement, traditional capacity with green transformation, and short-term gains with long-term sustainability. Enterprises that can achieve breakthroughs in low-carbon technologies, product structures, and market positioning will take the lead in the next round of industrial reshuffling. The major transformation in Southeast Asia's steel industry is not only reshaping the regional industrial landscape but also profoundly impact global steel trade and supply chains.

Malaysia's scrap metal industry has undergone a radical transformation, shifting from a period of unregulated "savage growth" to a new era of strict state control. This policy overhaul is driven by a desire to secure raw materials for domestic steel mills and enforce higher environmental and fiscal standards.

Malaysia’s rebar market has recently remained firm, with prices showing a steady-to-strong trend. This round of price support is primarily driven by a significant rise in production costs combined with a tightening supply structure, jointly pushing up overall market levels.

Malaysia exported just 7,181 tonnes of stainless-steel scrap in 2024, with India (72%) and Taiwan (24%) taking nearly all. China bought only 111 tonnes (1.5%), showing how its strict GB/T 39733-2020 import rules keep Malaysian scrap out despite higher prices. Without investment in sorting and certification, Malaysia will stay dependent on India and Taiwan.

NICKEL ORE Indonesian ore prices remained stable with a slight upward trend in pyrometallurgy, while hydrometallurgical ore prices may experience a downward adjustment. High-Grade NPI The supply-demand imbalance of high-grade NPI may emerge, and prices are likely to remain in the doldrums.

According to data from the General Administration of Customs of China, the total volume of coated plates (strips) exported from China in 2024 was 19.0652 million mt, up 20.66% YoY, while the proportion of the products involved exported to Vietnam accounted for only 3.29% of China's total exports of coated plates (strips)....

Overall, the main export entities' order-taking situation has been moderate. The export reductions to Vietnam and some countries during Ramadan have been offset by increases to Singapore, South Korea, Japan, and Malaysia. Therefore, China's steel exports in March may not see a significant MoM reduction. However, considering that many traders have recently reported that the main export varieties and order-taking situation are not optimistic, this data may emerge in late April. SMM predicts that steel exports in April may decline by 10%-15% MoM....

NICKEL ORE Indonesian Ore Supply Tightness Continues, Costs and Sentiment May Both Strengthen Under Policy Influence High-Grade NPI High-Grade NPI Cost Support Strengthens, Prices Relatively Stable with Strong Trend