This article first appeared in The Edge Malaysia Weekly on March 5, 2018 - March 11, 2018

THE Ministry of International Trade and Industry (Miti) has called for a meeting between cold rolled coil (CRC) players and some of the coaters on March 5 to end an ongoing dispute. High on the agenda is a discussion of the proposed imposition of import duties on CRC from certain countries to prevent dumping in Malaysia.

Some of the coaters involved in the discussion are FIW Steel Sdn Bhd, NS BlueScope (M) Sdn Bhd and Posco-Malaysia Sdn Bhd while the CRC players are CSC Steel Holdings Bhd, YKGI Holdings Bhd and Mycron Steel Bhd.

In a letter to Miti a few weeks ago, the three CRC players had named Vietnam, India, South Korea and Japan as the sources of the cheap imports.

“It [the meeting] is slated to take place in the morning; it is more a discussion to iron out issues,” a source says.

In a nutshell, the CRC players are alleging that some coaters are buying CRC that is being dumped here by the four countries.

Miti officials could not be contacted and did not respond to emails from The Edge but other government officials were aware of the meeting. One of the coaters as well confirmed the meeting on Monday but declined to elaborate.

CSC Steel, YKGI and Mycron allege that the dumping of CRC in Malaysia commenced between December last year and January this year. They had met Miti officials a few weeks ago and sought the imposition of five measures:  restrictions on imports or the implementation of quotas; import licensing by Miti; that anti-dumping duties be made retrospective to the date of the breach; that any application for CRC imports be made through Mesyuarat Mingguan Besi Keluli (a technical committee that evaluates applications for import duty exemptions for the raw materials of iron and steel products); and that an independent tier one audit firm be appointed to ensure that importers do not manipulate specifications or quality standards as a reason to import CRC at the expense of domestic players.

Interestingly, anti-dumping duties were imposed on CRC in May 2016, specifically on imports from China, South Korea and Vietnam.

CSC Steel, YKGI and Mycron are already grappling with higher industrial gas and electricity prices after tariff hikes this year and the Goods and Services Tax, which took effect in April 2015.

For its six months ended December 2017, Mycron posted a net profit of RM10.97 million on revenue of RM378.91 million. Compared with a year ago, net profit was down 44.06% despite revenue increasing 8.82%.

In its financial year ended Dec 31, 2017 (FY2017), YKGI suffered a net loss of RM14.74 million on sales of RM378.8 million.  In FY2016, it saw a net loss of RM9.96 million on revenue of RM399.62 million.

CSC Steel registered RM59.81 million in net profit on revenue of RM1.32 billion in the year ended December 2017. Compared with the previous year, net profit was down 12.93% despite revenue strengthening 27.83%.

Melewar Industrial Group Bhd holds a 71.26% stake in Mycron while YKGI is 26.78%-controlled by Marubeni-Itochu Steel Inc and 15.34% by Yung Kong Co Bhd, the vehicle of the Hii family. China Steel Asia Pacific Holdings Pte Ltd is a 46.3% shareholder of CSC Steel.

Mycron closed at 50 sen last Friday, which translated into a market capitalisation of RM140.36 million, while YKGI ended at 30 sen,  giving it a market capitalisation of RM102.76 million. CSC Steel closed at RM1.46, which gave it a market capitalisation of RM554.8 million.

While industry players say the three coaters have been doing well, it is difficult to gauge their performance as there are no up-to-date financials, and the dumping of CRC is said to have commenced only in December last year.

Nevertheless, in its year ended December 2016, FIW Steel registered an after-tax profit of RM33.96 million on revenue of RM238.2 million. Its largest shareholders are Japan’s Sumitomo Corp (33.28%), Singapore-based Yew Lian Property & Investment Pte Ltd (31.24%) and Amanah Raya Bhd Skim Amanah Saham Bumiputra (27.84%). Other shareholders are mostly foreigners with less than 1%.

In its year ended June 2017, NS Bluescope registered an after-tax profit of RM70.42 million on turnover of RM740.99 million. Checks on RAM Credit Information Sdn Bhd indicate that these are its best results since June 2013. It is a wholly-owned unit of NS BlueScope Lysaght (S) Pte Ltd.

Posco-Malaysia has not updated its financials since December 2015, when it suffered a loss of RM29.86 million on sales of RM332.82 million.

Posco (formerly Pohang Iron and Steel Co of South Korea) has an 81.7% stake in Posco-Malaysia while the other large shareholders are Posco Daewoo Corp (13.63%) and Pharr Lapp Sdn Bhd (4.58%).

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