Galvanized steel is steel coated with a protective layer of zinc to prevent rusting and increase the durability of steel structures. Galvanizing is done primarily through two methods, hot-dipped galvanizing and electro-galvanizing. In hot-dipped galvanizing, steel sheets are dipped in a bath of molten zinc at 460⁰C. A zinc oxide layer is formed on the steel, which prevents the steel from corrosion. In the electro-galvanizing method, steel sheets are dipped in a zinc ion solution, and current is passed through it so that zinc ions get uniformly spread over the steel sheets. Hot-dipped galvanizing is the most commonly used technique for galvanizing steel due to its low cost compared to electro-galvanizing.
The major factors driving the Southeast Asia galvanized steel market include increasing infrastructure investments in the Southeast Asian region and rising GDPs in the region. Moreover, rapid urbanization in the region, growing automotive markets, and establishment of the ASEAN economic community provide attractive growth opportunities for players operating in this market.
The Impact of COVID-19 on the Southeast Asia Galvanized Steel Market
The COVID-19 pandemic severely impacted several sectors in Southeast Asia, including construction, automotive, shipbuilding, and white goods. Infrastructure development and construction activities in the region came to a standstill due to the lockdowns imposed by governments across the region to contain the spread of the virus. The steel industry, a major raw material supplier for the automotive, construction, shipbuilding, and white goods industries, was severely affected due to the slowdown in these sectors during the peak of the COVID-19 pandemic in 2020. Steelmakers across the region reported that the demand for steel products during the COVID-19 pandemic had decreased by 90% compared to pre-COVID times. This crisis caused structural shifts with significant implications for the market.
In Southeast Asia, halted construction projects severely impacted the steel market, with the demand for steel recording a decline of 11.9% in 2020. The production and supply of galvanized steel, one of the most important raw materials for the construction, automotive, shipbuilding, and electrical appliances industries, were also severely impacted. The steel markets in Malaysia and the Philippines were the most severely impacted, while Vietnam and Indonesia saw only a modest decline in demand. According to the Indonesia Iron and Steel Industry Association (IISIA), in Indonesia, the pandemic had reduced the demand for steel products by 50%. The pandemic severely disrupted the cash flow of steelmakers in the country as major clients closed businesses. Some of the steelmakers in the country also faced business continuity challenges. Recovery is expected to be driven by a gradual resumption of construction activities, which will accelerate by 2022.
