Posted on 01 Dec 2015
Despite growth of the construction industry, the iron and steel industry in Malaysia still faces intense competition from China imports leading to the growing gap between imports and exports, which is expected to exceed five million tonnes this year compared with 1.02 million tonnes in 2009.
Malaysian Iron and Steel Industry Federation (Misif) president Datuk Soh Thian Lai said the first six months of this year pointed to a much wider import-export gap of over five million tonnes as the export of steel from January to June this year was 1.41 million tonnes, compared to import of 4.03 million tonnes.
“Due to cheap imports from China, average steel capacity utilisation in most sectors of the industry is below the 50% level,” Soh said.
However, China’s move to reduce the steel supply of 80 million tonnes in 2017 is expected to augur well for the industry, although it would take three to five years to adjust.
“On Malaysia, we encourage moves to consolidate, as under current excess capacity scenario, steelmakers need to look for certain ways of elimination and produce products that have better margins,” he said.
He also urged the authorities to further promote and enhance the usage of locally-produced iron and steel products in the socio-economic development of the country, and promote steel trades among Asean members.
Soh, who is also the managing director and chief executive officer of YKGI Holdings Bhd said this at the media conference of 2015 Asean Iron and Steel Sustainability Forum, which was organised by the South East Asia Iron and Steel Institute and co-hosted by the Misif with the Construction Industry Development Board, as supporting organisation.
Misif’s deputy president Datuk Lim Hong Thye pointed out that as China steelmakers priced their steel products with losses of RM400 per tonne, trade protection is needed from the government.
“At the beginning of 3Q, Malaysian steel bar prices reduced by almost RM200 per tonne, and it is currently sold below RM1,500, while Chinese priced it at loss making prices of US$250 to US$260,” Lim, who is also the managing director of Ann Joo Resources Bhd said, adding that oversupply remains a serious issue in the industry.
On Megasteel Sdn Bhd defending its petition for trade protection, Soh said, the results will be known in two months or by January.
“We view that Megasteel’s petition is invalid as the company’s profit margin is 14%, which is considered quite high in the industry, what is the reason for them to further ask for protection?” Soh said.
Megasteel, which is 78.9% owned by Lion Corp Bhd which is controlled by tycoon Tan Sri William Cheng Heng Jem, recently submitted a petition to defend its right to seek trade remedial measures against imports of hot rolled coil (HRC), by requesting the government to impose 40% safeguard duties on the imports of HRC.
