Journey to Wealth
Steel - Provisional Measure to Curb Wire Rods Dumping
THE BUZZ
The International Trade and Industry Ministry (MITI) yesterday in a press release said the government has completed the preliminary anti-dumping investigations on steel wire rods imports from China, Taiwan, Indonesia, South Korea and Turkey. Further investigation on the importations of wire rods from the alleged countries will be carried out. The government has also decided to impose a provisional measure, i.e. a provisional anti-dumping duty equal to the amount of the dumping margin determined through the preliminary investigations. Provisional anti-dumping duties ranging from 0% to 33.62% will be applied on imports from the alleged countries and shall be effective not more than 120 days from the date of the Government Gazette. The final determination will be made based on the outcome of the verification visits to foreign producers' premises no later than 120 days from the date of the preliminary determination notice report.
OUR TAKE
A quick recap. MITI on 28 May 2012 received a petition from domestic producers alleging that steel wire rods from Taiwan, China, Indonesia, South Korea and Turkey were imported into Malaysia at much lower prices than the domestic prices in those respective countries. The petitioners claim that this is causing material injury to Malaysia's domestic industry. MITI has since initiated preliminary investigations on such imports and studied the feasibility of imposing anti-dumping duties on steel wire rod imports.
Provisional measure welcomed. While the government may need more time (maximum 120 days) to reach a final determination, we welcome the provisional measure that will now require importers of wire rods to pay a provisional anti-dumping duty ranging from 0% to 33.62% guaranteed by a security equal to the amount of the dumping margin determined through MITI's preliminary investigations. We believe this will be a deterrent to any non-genuine imports of wire rods, as importers face the risks of their deposits being forfeited should the government find sufficient evidence of dumping activities in its final determination.
Maintain NEUTRAL. Meanwhile, wire rods imports jumped substantially to 474,561 tonnes in 2011, based on data compiled by the Malaysia Iron & Steel Industries Federation. The implementation of the provisional measure, which should curb import levels, certainly brings cheer to local wire rods manufacturers such as Lion Industries, Southern Steel, Kinsteel and Ann Joo. Nonetheless, sources revealed that wire rods imports have reduced since the petition was submitted to the government, thus we expect little impact from the proposed duty imposition. Furthermore, we see limited recovery in local steel prices despite international steel prices having since rebounded in the past couple of weeks, as domestic long steel products prices have been relatively firmer than international prices in the recent down cycle. In addition, some quarters may hold on to their shares on expectations that the Economic Transformation Programme (ETP) projects will spur demand, despite the disappointing financial results from steel companies. Hence, local steel counters are trading at some premium to their regional peers. With that, we maintain NEUTRAL on Malaysia's steel sector.
Source: OSK
The International Trade and Industry Ministry (MITI) yesterday in a press release said the government has completed the preliminary anti-dumping investigations on steel wire rods imports from China, Taiwan, Indonesia, South Korea and Turkey. Further investigation on the importations of wire rods from the alleged countries will be carried out. The government has also decided to impose a provisional measure, i.e. a provisional anti-dumping duty equal to the amount of the dumping margin determined through the preliminary investigations. Provisional anti-dumping duties ranging from 0% to 33.62% will be applied on imports from the alleged countries and shall be effective not more than 120 days from the date of the Government Gazette. The final determination will be made based on the outcome of the verification visits to foreign producers' premises no later than 120 days from the date of the preliminary determination notice report.
OUR TAKE
A quick recap. MITI on 28 May 2012 received a petition from domestic producers alleging that steel wire rods from Taiwan, China, Indonesia, South Korea and Turkey were imported into Malaysia at much lower prices than the domestic prices in those respective countries. The petitioners claim that this is causing material injury to Malaysia's domestic industry. MITI has since initiated preliminary investigations on such imports and studied the feasibility of imposing anti-dumping duties on steel wire rod imports.
Provisional measure welcomed. While the government may need more time (maximum 120 days) to reach a final determination, we welcome the provisional measure that will now require importers of wire rods to pay a provisional anti-dumping duty ranging from 0% to 33.62% guaranteed by a security equal to the amount of the dumping margin determined through MITI's preliminary investigations. We believe this will be a deterrent to any non-genuine imports of wire rods, as importers face the risks of their deposits being forfeited should the government find sufficient evidence of dumping activities in its final determination.
Maintain NEUTRAL. Meanwhile, wire rods imports jumped substantially to 474,561 tonnes in 2011, based on data compiled by the Malaysia Iron & Steel Industries Federation. The implementation of the provisional measure, which should curb import levels, certainly brings cheer to local wire rods manufacturers such as Lion Industries, Southern Steel, Kinsteel and Ann Joo. Nonetheless, sources revealed that wire rods imports have reduced since the petition was submitted to the government, thus we expect little impact from the proposed duty imposition. Furthermore, we see limited recovery in local steel prices despite international steel prices having since rebounded in the past couple of weeks, as domestic long steel products prices have been relatively firmer than international prices in the recent down cycle. In addition, some quarters may hold on to their shares on expectations that the Economic Transformation Programme (ETP) projects will spur demand, despite the disappointing financial results from steel companies. Hence, local steel counters are trading at some premium to their regional peers. With that, we maintain NEUTRAL on Malaysia's steel sector.
Source: OSK
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