Posted on 21 Oct 2014
HRCs from these countries are no longer cheap after the government slapped punitive anti-dumping duties on them last Friday.
What is worse for these manufacturers is that they may find themselves unable to buy local HRCs at preferential prices compared to companies that have been regular customers of Megasteel Sdn Bhd, the only local producer of this type of steel.
A steel industry source said Megasteel is expected to penalise companies that have bought cheap imports by selling them at non-preferential prices compared to regular customers.
The source said local players had been paying RM2,200 per tonne for Megasteel’s HRCs compared to imported steel from Indonesia which can be bought at RM2,070. However the new anti-dumping duties will push the price of imported steel to at least the same price as local HRCs.
“Local companies that have been buying cheap imports will put their orders on hold and turn to Megasteel.
"We expect Megasteel to look at the track record of these companies and may penalise them with high prices,” said the industry source who refused to be named. He said the anti-dumping duties will also allow companies to increase their finished products now that they don’t have to compete on price with rivals that have been relying on cheap imported steel. Companies that buy steel from Megasteel have seen their margins drop to as low as 3% in the past six years as they try to remain competitive with cheap imports. They say the “normal” margin for the industry should be about 8%.
Last Friday, the Ministry of International Trade and Industry (MITI) started to impose provisional anti-dumping duties ranging between 3.15% and 29.37% to be applied on imports of HRCs originating or exported from China, Indonesia and South Korea.
The move was made following a petition filed by Megasteel, Lion Corp Bhd’s 79%-owned subsidiary, on behalf of the domestic industry producing HRCs.
Megasteel, in the petition, alleged that imports of HRCs originating and imported from the three countries were at a price much lower than the price in their domestic markets. The petitioner claimed that this was causing material injury to the domestic industry in Malaysia.
MITI said the imposition of the anti-dumping duties will be subject to the outcome of the final investigation no later than 120 days from the date of the gazette of the provisional anti-dumping duties, which is Oct 17, 2014.
According to Malaysian Iron and Steel Industry Federation (MISIF), China currently has a production capacity of one billion tonnes with an excess overcapacity of about 250 million metric tonnes to 300 million metric tonnes flooding the international market and exported to Asia, Africa, the Americas and Europe.
MISIF said there was a drastic rise in import of steel products in the last four years in Malaysia — an increase of 75%. In 2009, four million metric tonnes were imported and in 2013 the imports reached seven million metric tonnes, with China alone contributing 26% of the imports.
