Member ID
User Password

Home  About Us  FREE Registration  Benefits  Contact Us  Partners  News  CRA Act

Latest Credit, Finance & Industry News
In-depth steel study to check out problems in M'sian steel sector [19-04-2012]  
    Email to friends.

The Boston Consulting Group (BCG) has been hired by the International Trade and Industry Ministry (Miti) to undertake an in-depth study on the current plight faced by players in the country's RM40bil steel sector, industry sources told StarBiz.

The final result of the study is envisaged to assist the Government in formulating an effective mechanism to settle the mounting issues, disputes and challenges in both the upstream and downstream steel sectors going forward, according to an industry player.

The source said that BCG, a global management consulting firm and leading advisor on business strategy, was officially appointed by Miti in the middle of last month and was given two to three months to conduct the study,

The study will cover various aspects, from competitiveness to a possible review of Malaysia's existing steel policy as well as the export and import duties given the influx of cheaper foreign steel goods coming into Malaysia.

So far, many steel companies and associations like Malaysia Steel Association (MSA) and the Malaysian Iron and Steel Industry Federation (MISIF) had received letters from the consulting group seeking feedback and input on the issues they face, added the source.

Help on the way to solve steel dilemma?

BCG's enquiries include players' evaluation on the competitiveness level of the local steel sector; whether the current steel policy benefits or penalises players and what role do steel players want the Government to play.

Another industry source explained that the appointment of BCG came about after Miti was faced with the task of mapping out the proper measures to address the increasing petitions and submissions from upstream and downstream steel players.

Many players have expressed their disappointment over the unfavourable bilateral free trade agreements (FTAs) between Asean and China, as well as the unbalanced domestic liberalised steel sector.

The situation was made worse by the hikes in electricity tariffs, natural gas prices and substandard products in the local market, said the source.

The latest submission to Miti is by Mycron Steel Bhd. The cold-rolled coils (CRC) manufacturer is seeking duty-free iron-ore based hot-rolled coils (HRC) import into Malaysia, given the difficulty in obtaining the product in Malaysia.

(HRC is the base raw material needed to produce CRC, which in turn is commonly used by automobile makers, electrical and electronics, and steel drums makers)

As a result of the shortage of raw material, Mycron claimed that the subsequent shortage in supply of domestically manufactured iron-ore based CRC had caused some of its downstream customers to seek supply by importing iron-ore based CRC from overseas, (approved by the authorities) on duty-free basis, on case to case basis thus affecting its business.

Mycron had said that it was unfair to allow unabated imports of almost one millions tonnes of duty-free iron-ore based CRC while restrictiing local CRC makers from obtaining sufficient supply of HRC raw material to manufacture iron-ore based CRC.

Currently, Megasteel Sdn Bhd which is a unit of Lion Group, is the sole producer of HRC in the country.

Megasteel, meanwhile, had also put up a safeguard petition in June last year asking the Government to impose an additional 35% duty on imported HRC, which currently attracts an import duty of 25%.

Miti, however, decided to terminate the petition last August given strong oppositions from both the local downstream steel players and foreign HRC exporters, which perceived it as unfair and would favour only one segment of the industry.

In late-October last year, Megasteel made a second attempt seeking the Government to consider reducing the import duty on flat-steel products to 15% from 25%. The latest petition, however, remained status quo.

Meanwhile, MISIF president Chow Chong Long said local steel players had been operating in a challenging environment especially with the Asean-China FTAs about three years ago.

He said there had been growing concerns over steel imports into the country. He urged the Government to consider strengthening its policy on steel import for export, the licence manufacturing warehouses status, zero import duty of foreign finished products and steel grades not locally produced in Malaysia.

Lion Group, one of the largest steel players in Malaysia also said recently that its unit Megasteel and local downstream producers of CRC, coated steel and pipes were also overwhelmed by imports.

It wants local policy-makers to look at the entire value chain in terms of loss in market share, revenue and value-add due to the rampant imports.

An estimated 850,000 tonnes of various CRC materials were imported last year, of which more than half or 450,000 tonnes can be produced locally.

Brought by:

Site Map | Best viewed at 1024x768 resolution. | © Copyright BASIS CORPORATION SDN. BHD. (315708-X). | | Share
Customer Notice and Summary of Rights | Personal Data Protection Policy   22-05-2018 08:04 PM