- The Star reports today that the Malaysian Iron and SteelFederation (MISIF) and Malaysia Steel Association (MSA) have joined ranks toseek the federal government's intervention in providing a mechanism to regulatethe level of steel imports in Malaysia.
- Among others, both MISIF and MSA are appealing to thegovernment to strengthen its policies in following areas:-
- Policies governingsteel imports for re-exporting purposes;
- The licensedmanufacturing warehouse status; and
- Zero import duty offoreign finished products and steel grades not locally produced inMalaysia.
- To this effect, both parties are pushing for the formationof a Malaysia Steel Institute, which is supposed to act as an independent bodythat will give recommendations to the Malaysia International Trade and IndustryMinistry (MITI).
- An immediate area of concern is the influx of cheaperimports of 'boron-added' steel products. Essentially, this has caused manylocally-manufactured finished steel products still unable to compete againstsimilar imported finished steel products, which have a zero import duty.
- Under Malaysia's national steel policy, only manufacturersare eligible to apply for duty exemption. While Malaysia has yet to impose anyform of anti-dumping duties to circumvent this problem, some of its ASEANneighbours such as Thailand have resorted to imposing an anti-dumping duty of19% under non-tariff barriers on such steel imports from China.
- We reckon that the situation is more pronounced,especially when stacked up against cheap imports especially from China, whichcome under the guise of boron-added steel products under alloy tariff codes,for which such items are duty-free when brought in by traders andstockists.
- To be sure, The Star report quoted the Lion Group assaying that its unit Megasteel has been overwhelmed by imports of bothhot-rolled coils (HRC) and cold-rolled coils (CRC).
- As such, we prefer the long-steel players where the threatof cheap imports are less pronounced, while domestic steel consumption shouldsee a pick-up in demand with the select roll-out of infrastructure products(e.g. Klang Valley MRT) under the government's ETP programme. Our top picks areAnn Joo Resources and Lion Industries