Tough going for M'sian Steelmakers

Thursday June 24, 2010

By HANIM ADNAN

nem@thestar.com.my

They seek changes in policies on steel to survive competition from regional players

SHAH ALAM: The Malaysian Iron and Steel Industry Federation (Misif), which is revising downward the country’s average steel consumption growth to 5% this year, wants the Government to further streamline its policies on steel to enable local market players to survive tough competition from other Asian steel players.

Misif president Chow Chong Long said its earlier forecast of 10% to 12% growth for this year was dashed following the quarterly iron-ore price increase, deepening euro sovereign debts crisis, potential slowdown in China as well as the rising costs from the removal subsidies in Malaysia.

“Signs (of growth) were looking good in the first half of this year but the recent global developments have implications on the supply, demand and prices of steel,” he told reporters at the two-day Misif 9th Conference on Status & Outlook of Malaysian Iron and Steel Industry which started yesterday.

These global developments could also severely affect the Malaysian steel companies which were increasingly becoming more export-driven, said Chow.

“However, the 10th Malaysia Plan which will continue to upgrade Malaysia’s infrastructure over the next five years, will help boost domestic consumption of building materials including steel.

“This will help cushion some of the external impact on local steel players,” he added.

Malaysia exports about 2.5 million tonnes of steel products, particularly long-steel products, annually to Asean countries. Of the long-steel products export, billet is the largest item representing about 603,890 tonnes in 2009.

Malaysia continues to be a net importer of steel products as there is demand for steel grades and specifications of various materials which are not produced locally.

Malaysia’s apparent steel consumption declined 16% to 7,094 tonnes in 2009 from 8,442 tonnes in 2008, bearing the full impact of the global economic recession.

The local steel industry is divided into two key sectors – long products primarily used in construction and industrial and flat products for automobiles, construction, shipbuilding and manufacturing.

Meanwhile, Amsteel Sdn Bhd senior general manager (marketing) Koay Boon Bioh in reviewing the long products said Misif had forecast a 3% to 5% growth for billets, bars, sections, wire rods and wire products this year.

“Exports to Asean countries especially Vietnam will sustain within the next few years until their own capacities come onstream. There will also be more steel demand from 10MP as reports indicated about 52 projects worth RM62bil with demand likely to filter within the next six to nine months,” he added.