Posted on 03 Nov 2014
The local steel industry is still viable and competitive given the increasing demand in the apparent steel consumption (ASC), which has crossed the 10 million tonnes mark last year, said Malaysian Iron and Steel Industry Federation (MISIF) president Datuk Soh Thian Lai.
The ASC is expected to grow by 4% per annum from 2014 to 2016, he said, adding that the projection is 10.5 million tonnes this year, 10.8 million tonnes in 2015 and 11 million tonnes in 2016 based on the baseline growth .
This was despite the industry facing significant risks such as increased dumping of cheaper imported steel, high costs and volatile prices of raw materials such as scrap and iron ore as well as the hikes in electricity and gas prices in recent years.
“To stay competitive, the steel sector is urging the Government not to issue new licences on products currently produced, encouraged investments on new steel products as well as enforced buy Made-in-Malaysia steel products policy,” Soh said in a panel discussion at a MISIF steel conference held here recently.
“If all the government-linked companies (GLCs) and government owned projects are using local steel products, we believe at least two to three million tonnes of local steel per year can be increased to replace net imports,” he added.
The Government also needed to impose more trade measures to help out the injured steel millers affected by the cheaper imported steel products, especially from China flooding into the local market in recent years.
“Under the WTO (World Trade Organisation) rules, we have the right to do so (trade measures).
“After steel bar, we should look at other affected businesses such as galvanised iron products, cold rolled coiled products and pre-fabricated pre-painted steel products.”
Soh pointed out that the government should also provide incentives such as full off-peak period rates for electricity and natural gas during public holidays and weekends to help out the steel industry players have a competitive break to produce lower cost products.
The strategic steel sector in Malaysia is estimated to worth over RM40bil, hiring 150,000 direct employment and about 100,000 indirect employment.
Given the continued dumping of cheaper imported goods, crude steel production in Malaysia has dropped sharply while finished steel production was flat, totalling 4.7 million tonnes and 7.5 million tonnes respectively.
Soh noted that the low facility utilisation with significant under-utilisation included bars and wire rods, sections, plates and flat rolled products.
Ann Joo Resources Bhd group managing director Datuk Lim Hong Thye concurred that the domestic steel sector is still competitive, but “the issue here is how the government can help the industry to address the influx of cheap steel products from China.”
Contrary to the perception that the local steel outlook is quite bad and Malaysian steel millers are not competitive, he pointed out that Malaysia has the strategic location, good infrastructure, stable road transportation and utilities which are conducive to develop a strategic steel sector.
“However, the steel landscape here has changed as the sector is no longer looking at cheap workforce as we need skilled workers especially in the upstream side.
Relatively, Malaysian steel players are better than their South-East Asian counterparts, said Lim.
“While some suggested that buying cheaper imports will help to lower the cost of construction but are these so called cheap China steel products sustainable especially the boron-added-type alloy steel?”
CSC Steel Holdings Bhd managing director Chen Chung Te, meanwhile, said many other countries like Asia, Europe and the United States were also affected by influx of cheap steel imports from China.
For Malaysia, which is looking at achieving the developed economy status by 2020, he suggested that local steel players venture into high quality steel production for automobile and the electrical and electronics sectors. “The local industry should try to improve on its supply chain by investing into high facility whereby you can supply at least 70% to 80% to the niche sectors while 20% for export,” he said.
