KUCHING: Since the implementation of the Asean-China free trade agreement in January 2010, export of steel products from China to Asean has seen a dramatic surge so much so that such imports to a great extent are competing directly with similar steel products produced in the region.
Dato Soh Thian Lai, managing director for Yung Kong Galvanising Industries Bhd (Yung Kong) and member of the Malaysian Steel Council (MSC) stated that the large influx of cheap low quality steel from China had taken a toll on the local steel market, pulling down profit margins of all the players in the industry.
The huge influx of steel exports from China had also resulted in many Asean steel producers cutting down their productions and thus causing serious injury to the regional steel industry.
Asean steel players also alleged that steel exporters from China often manipulated the loopholes in China’s steel export tax and rebate structure to maximise their export market penetration resulting in the dumping of cheap China steel products in Asean.
The collaboration between the Malaysian Steel Council (MSC), a five working committee from both the private and government sector is working closely with the Ministry of International Trade and Industry (Miti) to help ease the burden on local players and to address the market saturation of low quality steel from China.
Soh noted that the MSC technical commitee held meetings every month to discuss and pass solutions on to the MSC to endorse and put in place.
“The action plans that are being implemented are well thought of to ensure a win win situation for both the private sector and the public sector,” Soh added during Yung Kong’s extraordinary general meeting on Tuesday.
“Companies are encouraged to have their own measures put in place as well. Yung Kong has set its own revenue and profit margin management strategies, productivity strategies and also implements cost management strategies to enhance the sustainability for the company in the market,” Soh added.
With certain measures put in place, Soh expressed his bullish views on the steel sector as the market was now showing signs of recovery and Yung Kong was back in the black, recording a near record turnover for one quarter after two years in the red.