KUALA LUMPUR: Malaysia’s iron and steel industry is expected to continue its upward momentum in the fourth quarter of the year, after China agreed to cut its steel production beginning this year, the Malaysian Iron and Steel Industry Federation (MISIF) said.
President Datuk Soh Thian Lai said China’s decision to slash its steel production capacity by 46 million tonnes this year has helped normalise local steel prices since the third quarter of 2016.
“The worst is over, and we expect industry players to see more profitability in the coming quarter,” he told a press conference after launching the 12th MISIF Conference on Status and Outlook of the Malaysian Iron and Steel Industry here today.
Themed “Towards A Competitive and Sustainable Steel Industry in Malaysia”, the biannual event aims to update the stakeholders on the development and challenges in the local industry. It was officiated by International Trade and Industry Deputy Minister Datuk Ahmad Maslan.
Soh said Malaysia’s steel consumption currently stands at about 10 million tonnes, putting the country among the top four in ASEAN after Vietnam (18 million tonnes), Thailand (14 million tonnes) and Indonesia (12 million tonnes).
“China’s decision to cut output, coupled with the trade measures undertaken by the government, have helped the local steel companies to secure a reasonable profit margin,” he said. He said steel imports from China surged to 3.4 million tonnes last year from 900,000 tonnes in 2011, adding the steel oversupply was behind the global steel price slump.
For the upcoming Budget, Soh hopes the government would consider granting 100% investment tax allowance to industry players instead of the current 60%.
“This will encourage more companies in the construction industry to adopt the industrialised building system (IBS), which is currently adopted by less than 20% of the local construction sector,” he said. He also expressed hope the government would push for a “buy Malaysian products first” policy, especially in the construction industry, to ensure higher utilisation of local iron and steel materials.
“Moving forward, the industry needs to consolidate through mergers and acquisitions (M&A) to promote efficiency, transfer of technology, as well as to enhance competitiveness and sustainability,” he added. Meanwhile, Malaysia Steel Institute (MSI) CEO Jarrod Lim said the government is currently looking into implementing a consolidation programme to facilitate the local iron and steel industry players.
“We are conducting a study now to see if the implementation of M&A would make Malaysian companies more sustainable and stronger,” he said.
Lim added that currently, there are more than 400 industry players in the supply chain of the country’s iron and steel industry.
