This article first appeared in The Edge Malaysia Weekly on March 19, 2018 - March 25, 2018

THE entire Malaysian flat steel value chain is seeking protection from the government via the imposition of tariff and non-tariff barriers, which would help curb the dumping of cold rolled coils (CRC) galvanised iron, pre-painted galvanised iron and electro galvanised steel in Malaysia.

The Ministry of International Trade and Industry (Miti), CRC players and re-rollers had met a couple of weeks ago to discuss the enforcement of anti-dumping duties on CRC from certain countries.

Initially, some coaters were accused of buying their CRC requirements on the cheap from countries dumping in Malaysia but eventually, the coaters too sought protection, the effect of which trickled down to encompass the whole value chain, an executive present at the meeting says.

“The government is looking at it (protecting the entire flat steel value chain) seriously. How we are protected is up to the government. It could be via the imposition of trade barriers such as duties or non-trade barriers,” he adds.

He says high-end manufacturing will not be impacted as special exemptions are generaly made for these industries.

Local players — basically the coaters and CRC manufacturers — who met to resolve the issue unanimously, sought protection for the entire chain from the government.

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

In a letter to Miti seeking the imposition of import duties a few weeks ago, CSC, YKGI and Mycron had named Vietnam, India, South Korea and Japan as the sources of the cheap CRC imports.

The three companies initially sought the imposition of five measures — restrictions on imports or the implementation of quotas; import licensing by Miti; anti-dumping duties to be made retrospective to the date of the breach; any application for CRC imports to be made through Mesyuarat Mingguan Besi Keluli — a technical committee to evaluate import duty exemption applications for the raw materials of iron and steel products; and an independent tier one audit firm to be appointed to ensure importers do not manipulate specifications or quality standards as a reason to import CRC at the expense of domestic players.

This proposal was made about a month ago but now, the players are looking at a wider range of protection for the entire value chain.

The flat steel industry is already grappling with higher industrial gas and electricity prices after the imposition of tariff hikes this year. Also burdening the players is the Goods and Services Tax that took effect in April 2015.

According to flat steel players, the failure of Perwaja Steel and Megasteel has given financial institutions cold feet when it comes to lending to steel companies.

Local steel players often complain that Malaysia allows other countries to freely export but other countries do not reciprocate by allowing foreign steel to penetrate their domestic market.

In its six months ended Dec 31, 2017, Mycron posted a net profit of RM10.97 million on revenue of RM378.91 million. A year ago, net profit was down 44.06% despite revenue gaining 8.82%.

In its financial year ended Dec 31, 2017, YKGI suffered a net loss of RM14.74 million on revenue of RM378.8 million. In the previous corresponding period, it posted a net loss of RM9.96 million on revenue of RM399.62 million.

In its financial year ended Dec 31, 2017, CSC registered a net profit of RM59.81 million on revenue of RM1.32 billion. In the previous year, net profit dropped 12.93%, although revenue strengthened 27.83%.

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