Posted on 24 Nov 2014
Lion Corp Bhd's unit, Megasteel Sdn Bhd, expects domestic orders to improve after the recent imposition of the preliminary anti-dumping duties on hot rolled coils (HRC) originating or exported from China, Indonesia and South Korea.
“We expect local orders to increase and selling prices to improve since the issue of dumping of coils by the three nations subject to the provisional anti-dumping duties on HRC is temporarily resolved. We anticipate an increase of about 10% to 20% in orders,” the company's spokesperson told The Malaysian Reserve (TMR) yesterday.
A source familiar with the company told TMR that Megasteel is already ramping up its production at its plant in Banting, Selangor immediately after the Ministry of International Trade and Industry's (MITI) announcement on the provisional anti-dumping duties. Megasteel's current production capacity for HRC is 3.2 million tonnes per annum.
Lion Corp's financial results was badly impacted by the dumping activities from the alleged countries. For the twelve months ended June 30, 2014 (FY14), Lion Corp's net loss widened to RM526.49 million from the net loss of RM245.62 million recorded in FY13 as a result of poor performance of its steel division which continued to be affected by the dumping activities.
Before the anti-dumping duties was introduced, sources told TMR that Megasteel production is below 50% level at its facility as the company was adversely impacted by the influx of cheap imports from the alleged countries.
Last month, an industry source told TMR that domestic steel players that have been importing HRC from the alleged countries will have to pay higher price for the raw material as they might be penalised by Megasteel due to their “poor track record”.
The source said as at October 2014, the local players are buying hot rolled coils from Megasteel for RM2,200 per tonne. The source said that based on the latest consignment by Indonesia, the country is selling hot rolled coils for RM2,070 per tonne, without the additional anti-dumping duties announced by the government recently.
The price of HRC closed at RM2,126.12 per tonne on Monday, up from RM2,121.69 recorded on Friday.
The source said that the local steel players who had been buying from Megasteel, and were squeezed due to the more expensive raw material, expected to see better margins for their finished products as imported HRC will be comparatively more expensive under the anti-dumping penalties.
Megasteel, as contacted by TMR earlier refused to comment on the issue.
MITI had in October announced a provisional anti-dumping duties ranging between 3.15% and 29.37% and will be effective not more than 120 days from Oct 17, 2014.
The move was made following a petition filed by Megasteel on behalf of the domestic industry producing HRC.
Megasteel, in the petition, alleges that imports of HRC originating in imported from the three countries at a price much lower than the price in their domestic markets. The petitioner claims that this is causing material injury to the domestic industry in Malaysia.
Meanwhile, an industry source told TMR that Ann Joo Resources Bhd has submitted its petition to the investigating authority on behalf of steel bar producers, which the outcome is expected to be announced in December 2014.
Besides that, CSC Steel Holdings Bhd said the company expects cold rolled steel and coated steel manufacturers, who has been affected by the dumping activity, to filed an anti-dumping petition with MITI soon.
