Brief on steel industry in Myanmar
Posted on 27 February 2019
Myanmar’s manufacturing sector has expanded by leaps and bounds in recent years, with its contribution to total GDP rising from 11.5% in 1989 to 35.4% in 2017. Myanmar has recently developed three major special economic zones to cater for the need of this sector; namely Dawei Special Economic Zone, Thilawa Special Economic Zone and Kyauk Phyu Special Economic Zone. Myanmar’s GDP growth rate of 6.842% in 2017 was even higher than the fastest growing economy in ASEAN-6, i.e., Vietnam which registered a growth rate of 6.812% in the same year. However, Myanmar’s GDP per capita was only USD1,354 in 2018, compared to Vietnam’s USD2,553.
Steel demand in Myanmar comes mainly from the expanding construction sector. Myanmar’s economic development is expected to drive more infrastructure and construction projects in the short-to-medium term. Steel consumption per capita in Myanmar has increased from 11.4 kg in 2000 to 21.9 kg in 2011. According to POSRI, Myanmar’s steel demand per capita is expected to reach 58.7 kg in 2020 and 83.8 kg in 2025. This is based on the expectation that Myanmar’s steel demand will continue to expand at an average growth rate of 8% per annum. This means steel demand in the country could exceed 3 million tonnes in 2020 and reach 5 million tonnes in 2025.
The bulk of the steel demand in Myanmar’s construction sector is for rebars, which accounts for 60% of total, followed by galvanized sheet and color coated sheet (30%) and hot rolled plates and sheet (10%).
However, steel production capacity within the country is still low and expanding slowly. Total production capacity is less than a million tonnes a year, with around 400,000 tonnes per year capacity of billet production and around 500,000-600,000 tonnes of long steel rolling capacity. Meanwhile, coated sheet capacity is around 300,000-500,000 tonnes per year.
As a result, Myanmar still has to rely heavily on steel import to fulfill its growing demand. In 2017, 30% of total import was in the form of bar, followed coated sheet, 20%. Import of section and pipes & tubes registered a share of 12% each. Total finished steel import was estimated to register nearly 2.5 million tonnes in 2015. However, the volume decreased by 16% y-o-y to around 2 million tonnes in 2017.