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China’s discarded induction furnaces have made their way to Indonesia and Philippines fueling safety and environmental concerns. The Philippines and Indonesia have seen an influx of these furnaces since China prohibited their use for steelmaking in June 2017, eliminating 140 million tonnes of capacity as both nations are big steel importers with fast-growing economies are ideal markets for these IFs that produce cheaper steel. But some big Indonesian and Philippines steelmakers claim that IF-produced steel does not meet national quality standards and poses a major risk in these countries that are prone to earthquakes and typhoons. They have urged their governments to ban IFs. Unlike electric arc furnaces, IFs have limited or no capacity to remove impurities in the process of producing steel, resulting in inconsistent product quality. Since most IFs in the two countries produce rebar, rival steelmakers say that poses safety hazards.
Mr Rosberto Cola, VP of leading Philippine steelmaker Steel Asia Manufacturing Corp and president of the Philippine Iron and Steel Institute, said “In the Philippines, the rebar market is under attack from IF producers which sell the product 20% cheaper than those from electric arc furnaces. The total capacity of IFs in the Philippines has surged to 400,000-500,000 tonnes from 150,000-200,000 tonnes two years ago.”
Mr Silmy Karim CEO of top Indonesian steelmaker PT Krakatau Steel and chairman of the Indonesian Iron and Steel Association said “In Indonesia, after China banned IFs, the furnaces were imported by factories to reduce steelmaking costs at the expense of safety. Imagine, Indonesia is an epicentre for earthquakes, so we must be vigilant. They must be prohibited. In Indonesia, 30-40 percent of domestic rebar producers use Ifs.”
Mr Chu Duc Khai, vice chairman of the Vietnam Steel Association, said Vietnam has not seen any movement of IFs from China since the latter banned the furnaces in 2017. The government is not allowing new investment in IFs.”
Mr Wikrom Vajragupta, chairman of the Thailand Iron and Steel Industry Club, said “There are also no new IF investments in Thailand with the rebar market there facing overcapacity, making it unattractive for new entrants.”
The ASEAN Iron and Steel Council (AISC), which counts as members Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, had called on Southeast Asian governments to prohibit the entry of obsolete induction furnace facilities from China to their countries in January 2018. It said "We would like to voice our concern over a recent development in the iron and steel industry in ASEAN, whereby obsolete induction furnace facilities are being moved from China into the region to produce sub-standard quality carbon steel products.”