SMM urges tighter controls on low-quality rebar across Thailand and ASEAN

Shanghai Metals Market (SMM), a global metals market intelligence platform, has warned that poorly controlled induction-furnace steel production is creating serious building-safety risks across Southeast Asia, particularly in Thailand, the Philippines and Indonesia.

In an analysis published in August 2026, SMM argued that machinery and production practices associated with China’s former substandard steel industry had shifted into the region after Beijing’s major crackdown in 2017.

The report warned that rebar produced without adequate refining could be brittle, inconsistent in quality and unable to provide the ductility needed for buildings to withstand seismic forces. It urged ASEAN governments to tighten controls before further structural failures occur.

Chinese furnace equipment shifts into Southeast Asia

China launched a sweeping campaign against low-quality steel known as ditiaogang, or “ground-strip steel”, in 2017, closing factories and eliminating more than 140 million tonnes of production capacity.

SMM cited Chinese customs data under HS 8514, covering industrial electric furnaces, as an indicator that machinery and equipment subsequently moved into Southeast Asia.

The region’s share of Chinese electric-furnace equipment exports rose from 24.1% in 2017 to a peak of 40.6% in 2021. It remained at 31.5% in 2025, when shipments to Southeast Asia were valued at more than US$125.3 million.

China’s steel-scrap exports to the region also surged from 18,000 tonnes in 2016 to more than 1.39 million tonnes in 2017.

The Philippines recorded one of the clearest increases. Its annual scrap imports rose from fewer than 5,000 tonnes to nearly 300,000 tonnes in 2024, while the country’s induction-furnace production capacity expanded from less than 150,000 tonnes in 2017 to about 3 million tonnes in 2025.

Missing refining process creates inconsistent rebar

SMM stressed that induction-furnace technology was not inherently unsafe. The principal concern was the way some operators used small furnaces to melt scrap and cast it directly into rebar without completing the necessary refining process.

Without refining, induction furnaces cannot adequately remove impurities such as phosphorus or control carbon content as precisely as electric arc furnace, or EAF, and blast furnace-basic oxygen furnace, or BF-BOF, production routes.

This can lead to significant variations within the same batch. Some bars may meet the required standard, while others may fail when bent during construction.

Residual impurities can also reduce ductility, the ability of steel to deform without breaking. This is particularly important in earthquake-resistant structures, where rebar must absorb movement and seismic forces rather than fracture.

“Within one batch of IF rebar, some bars may pass while others fail when bent, directly weakening ductility under earthquake loads,” the report warned.

Bangkok building collapse intensifies scrutiny

SMM linked its warning to concerns raised after the March 2025 earthquake in Myanmar, whose tremors reached Bangkok and caused the State Audit Office building under construction to collapse.

The report noted that Xin Ke Yuan Steel, one of the project’s rebar suppliers, had previously produced steel that failed tests for yield strength and mass per metre. Thai authorities had ordered the factory to halt production in late 2024 because of quality-related problems.

Thailand’s Industry Ministry subsequently intensified its crackdown, sealing seven steel plants and impounding non-compliant induction-furnace rebar worth more than 384 million baht.

Authorities also began considering the withdrawal of Thai Industrial Standards certification for steel produced through induction-furnace processes.

SMM alleges abuse of certification system

According to SMM, induction-furnace rebar can be sold for about 20% less than compliant EAF steel because some producers avoid the costs of refining equipment and pollution-control systems.

The report also raised governance concerns, alleging that some manufacturers selected only their highest-quality rebar for submission to government agencies during certification inspections.

After passing the inspection, they allegedly supplied lower-quality steel to construction sites, particularly in provincial areas where regulatory oversight was more limited.

Such practices not only create risks for buildings and infrastructure, SMM argued, but also undermine compliant producers that bear the costs of meeting manufacturing and environmental standards.

Zero-tolerance controls urged across ASEAN

SMM maintained that random inspections of finished products and financial penalties might no longer be sufficient because low-cost, non-compliant production had already distorted the regional steel market.

It urged ASEAN governments to adopt a “zero-tolerance” approach to unsafe construction materials, with a greater focus on traceability, controls throughout the production process and rigorous metallurgical testing.

The report did not call for induction-furnace technology to be rejected in all circumstances. Instead, it argued that governments should prevent the sale of steel whose quality and public-safety performance could not be guaranteed.

“Before the next major earthquake strikes, Southeast Asian countries must take decisive action against low-quality steel,” SMM warned.

The spread of poorly controlled rebar production represents a hidden risk within the region’s infrastructure and housing. Thailand’s enforcement campaign marks an important step, but consumers and contractors must also recognise the danger and avoid supporting cheap steel that fails to meet required standards.

Source: Metallurgical News