POSSIBLE ACCELERATION: Photo shows steel bars lined up post-processing. The steel sector is expected to fare better from the fourth quarter onwards when government-initiated mega infrastructure and property projects enter full swing.
KUCHING: Following an alleged dumping of steel wire rods imported from China, Taiwan, Indonesia, South Korea and Turkey, the Ministry of International Trade and Industry (Miti) has invited all interested parties to submit their views on the matter.
“All interested parties including importers, foreign producers, exporters and associations to submit their views on the matter to Miti by August 5, 2012,” according to ECM Libra Capital Sdn Bhd (ECM Libra) analyst, Benjamin Lee.
Lee added that, in accordance with the Countervailing and Anti-Dumping Duties Act 1993, a preliminary determination on whether there was sufficient evidence of wire rod dumping and injury to the Malaysian steel industry would e made by the government by the end of October this year.
Should the final determination affirm the dumping, the analyst believed that the government would then impose anti-dumping duties at a rate that would rectify the situation.
Citing a prior news report, Miti would hold a meeting this week with Malaysian steel producers and representatives from the Malaysian Steel Association (MSA) and Malaysian Iron and Steel Federation (Misif) to discuss the policy changes for the local steel industry.
Lee also said, “From our checks with domestic steel manufacturers of the aforementioned steel exporting countries, the biggest threat seems to come from China, whose steel mills add boron to their wire rods, thus classifying them as alloy steel products instead of the conventional low carbon steel.”
He explained that the boron-added wire rods would hence be enabled to qualify for a 10 per cent tax rebate from the Chinese government and bypass the five per cent Malaysian import duty imposed on long steel products.
This resulted in the importing in the imported wire rods being sold about 15 per cent cheaper than locally produced wire rods. Locally manufactured steel bars also faced a similar situation due to the influx of boron-tinted steel bars originating from China.
Lee believed that increased competition from imported Chinese steel bars and wire rods explained the year-on-year lower sales tonnage and reduced profit margins of long steel products experienced in the first quarter this year by local steel players like Lion Industries Corporation Bhd and Southern Steel Bhd despite the surge in Malaysian construction gross domestic product.
“We think that the threat of steel dumping by China into the Asean region may persist for the rest of the year due to China’s oversupply of steel, exacerbated by the slowdown faced by the Chinese real estate sector,” the analyst opined.
Lately, Lee observed that the government had taken steps to safeguard the local steel industry against the flooding of cheap, substandard steel imports into the local market.
Lee believed that the steel sector would fare better from the fourth quarter onwards when government-initiated mega infrastructure and property projects such as the Klang Valley My Rapid Transit and Kuala Lumpur International Financial District entered full swing.
“This would trigger a pick-up in demand for steel products, especially steel bars and wire rods. The imposition of the anti-dumping duties and any policy revision arising from Miti’s meeting with MSA and Misif that is supportive to the local industry would serve as a catalyst for the sector,” Lee said.