Economic Dynamics: Continued High Growth Forecast for Steel Sector
The Southeast Asian steel industry is developing against the backdrop of remarkable economic dynamism in the region, making it one of the most attractive markets for European companies. The region records robust economic growth that is significantly above the global average and generates sustainable steel demand.
Macroeconomic Key Data 2025
The economic development of Southeast Asian core countries shows a differentiated but consistently positive picture:
Vietnam is increasingly positioning itself as the region's economic powerhouse with an ambitious GDP growth target of 8% for 2025. GDP per capita now stands at approximately 4,300 USD (2024), making Vietnam one of the region's most dynamic markets. Registered foreign investments rose by 34.7% in the first quarter of 2025 compared to the previous year – a strong signal of international confidence in the Vietnamese market.
Thailand shows a solid middle-class base with a GDP per capita of 7,810 USD and estimated growth of 4.2% for 2025. The established industrial structure and its exposed geographic position as a Southeast Asian hub make Thailand an ideal starting point for regional business activities of European companies.
Indonesia presents itself as Southeast Asia's largest economy with a GDP per capita of 5,270 USD and enormous domestic market potential with a population of 285 million people. The projected growth of 4.8% for 2025 is driven by massive infrastructure investments.
Malaysia combines, as an emerging industrial nation, a GDP per capita of 13,310 USD with similar strategic advantages to Thailand as a regional hub and extended workbench of Singapore. Forecasts see Malaysia on the path to becoming a developed country with an expected GDP per capita of 26,000 USD by 2035.
These economic fundamentals create ideal conditions for European companies wanting to invest in high-growth markets with increasing purchasing power.
Steel Consumption: Low Starting Level as Market Opportunity
The per capita steel consumption data illustrates the region's extraordinary growth potential and offers European technology and equipment providers unique market opportunities:
- Vietnam: 240 kg per capita (slightly above the global average of 214 kg)
- Thailand: 180 kg per capita
- Malaysia: 90 kg per capita
- Indonesia: 80 kg per capita
- Regional average: 110 kg per capita
Particularly noteworthy is the development potential in per capita steel consumption in Indonesia and Malaysia, where it still lies significantly below the global average. With a projected urbanization rate that experts believe will rise rapidly over the next ten years, European companies have unique opportunities to bring technologies and expertise to markets that are on the verge of a multi-year growth cycle.
Overall, the Southeast Asian steel industry currently presents itself as a heterogeneous structure of national markets with different development levels and strategic orientations. Vietnam has established itself as the undisputed regional market leader, with crude steel production of 22 million tons and total finished steel production of 30 million tons in 2024, representing 7% growth compared to the previous year. These figures underscore Vietnam's position as a significant regional producer, although the country is still quite distant from production giants China, Japan, Korea, and India on a global scale.
While Vietnam as "Leader of the Pack" sets the pace, other ASEAN steel producers show a differentiated picture: Thailand and Indonesia follow as other important regional producers, although their competitiveness is currently increasingly suffering from structural problems.
Production costs for crude steel in Thailand are not only higher than in Vietnam and Indonesia but also higher than in Asian competitor countries China, India, and Japan. These cost disadvantages significantly limit the future growth potential of Thai steel production and force the country into strategic reorientation toward higher-value steel products.
Malaysia, however, has proven to be a beneficiary of international trade diversions, particularly through Chinese investments and the rerouting of trade flows due to US tariff policies.
Indonesia struggles despite its large economic strength with outdated production facilities and high modernization costs, which weakens competitiveness against more efficient Vietnamese producers.
These different national starting positions lead to complex regional dynamics that are particularly evident in the consumption structures and demand drivers of individual markets.
Demand Dynamics: Construction Sector and Infrastructure as Regional Growth Engines
Steel consumption in Southeast Asia is primarily dominated by two sectors throughout the region: construction and infrastructure development. Both in Vietnam, where the construction sector currently accounts for more than 93% of total steel demand, and in Thailand and Indonesia, massive investments in infrastructure development and booming real estate markets are the drivers of steel demand.
Urbanization dynamics significantly amplify steel demand throughout the region. Vietnam aims to increase the urbanization rate to 45% by 2025 and to 50% by 2030, while Thailand already stands at 50% and Indonesia is rapidly catching up. This development leads to rapidly rising regional per capita steel consumption, which will accelerate further by 2030.
These robust demand fundamentals create the foundation for regional growth but simultaneously raise questions about production capacities and structural challenges faced by various national steel industries.
Common Structural Challenges: Overcapacities and Technology Lag
Despite different national starting positions, the entire Southeast Asian steel industry struggles with similar structural problems that threaten its long-term competitiveness.
Overcapacities as Regional Problem
Due to high export dependence, ASEAN region countries often face overcapacities. This is most evident again using Vietnam as an example, where the Hoa Phat Group – Vietnam's largest steel producer – made 31% of its revenue through exports last year. Similar dependencies are also shown by Thai and Indonesian producers who likewise rely heavily on export markets.
Overcapacities in the region lead to intensified competition and significantly increase export pressure, which in turn can lead to trade conflicts and trade restrictions that ultimately harm all exporting countries in the region.
Technological Backwardness as Common Weakness
The Southeast Asian steel industry throughout the region still predominantly relies on traditional, emissions-intensive blast furnace-basic oxygen furnace (BF-BOF) processes. This technology choice reflects historical investment decisions throughout the region but brings considerable environmental challenges.
