This report profiles Malaysia’s steel industry, discussing market trends and outlook through 2013 and into 2014 and beyond. The report also highlights key leading players in the sector including Lion Industries Corporation Bhd, Ann Joo Resources Bhd, CSC Steel Holdings Bhd, Southern Steel Bhd, and Kinsteel Bhd.

Malaysia’s apparent steel consumption increased 12% to 10mn tonnes in 2013 mainly driven by mega infrastructure projects under the government’s Economic Transformation Programme (ETP). However, the growth in consumption was mostly served by imports as domestic output stagnated and imports surged significantly by 15% to 6.9mn tonnes, while exports declined considerably by 32%.

The local steel industry continues to be hampered by the influx of cheap imported Chinese steel products which has depressed selling prices. This is further compounded by the global oversupply situation spurred by China, the world’s largest steel producer, which has led to the softening of international steel prices and volatile raw material costs. In addition, the recent hike in electricity and gas tariffs has driven up operation costs of the steel industry. Under these tough market conditions, performances of domestic steel companies generally declined. Most companies saw reduced sales volume and earning margins.

According to the Malaysian Iron and Steel Industry Federation (MISIF), the domestic steel industry, in consumption terms, is expected to grow at an annual rate of 4% from 2014 to 2016. Demand for domestic steel products is expected to remain buoyant with the ongoing major construction projects under the ETP. Overall, the outlook for the Malaysian steel industry is neutral as the positive impact of mega-projects will generally be offset by rising input costs and soft external outlook. Moreover, local steel producers will only fully benefit from the growth in demand of steel if the anti-dumping duties and steel policy imposed by the government are implemented effectively.

Key Points:

• In line with the roll-out of the government’s mega infrastructure projects, Malaysia’s total steel demand was 10mn tonnes in 2013. MISIF expects domestic steel demand to grow at an annual average rate of 4% until 2016.

• Malaysia is becoming a greater net importer of steel products, with China being the largest origin of steel import. The country’s iron and steel products import surged significantly by 15% in 2013 to cope with the increase in demand for steel.

• Due to the scale of China’s production and Malaysia’s progressive liberalisation policy, local steel players continue to suffer from the increasing dumping of cheap imported Chinese steel into Malaysia, which has weighed down on prices and margins.