KUALA LUMPUR (Dec 15): Four days after the Malaysian Iron and steel Industry Federation (Misif) issued a statement against a proposal by Megasteel Sdn Bhd to set up a special purpose vehicle (SPV) solely to import hot rolled coils (HRCs) and downstream products into Malaysia, Megasteel has hit back, saying that the federation is "very short-sighted in objecting to well-meaning petitions to safeguard the Malaysian steel industry".

In a statement today, Megasteel said Misif's views are not an accurate reflection of the needs of the steel industry.

Despite the allegations by Misif and its call to the government to reject Megasteel's petition for safeguard measures for HRC production, Megasteel pointed out that several of Misif's members who are downstream users of HRCs are in support of the safeguard petition to protect the interests of the local HRC and downstream industry.

Megasteel said today the entire steel industry is affected by an oversupply situation due to excessive dumping, resulting in a spate of petitions being submitted by local steel industry players such as CSC Steel Sdn Bhd, FIW Steel Sdn Bhd and Ji Kang Dimensi Sdn Bhd for protection since 2013. However, these are for products such as pre-painted/painted/colour coated steel coils, cold roll coils (CRCs), steel wire rods and electrolytic tinplate.

"We foresee that the petitions will not cease until the global steel markets have stabilised.

"In the interim period, the local steel producers need to be shielded in some form. Otherwise, the closure of steel mills will cause loss of jobs and irreparable future damage to the manufacturing competitiveness of Malaysian downstream manufacturers," said Megasteel.

Last Friday, The Edge Financial Daily reported on a scheduled meeting between Megasteel and senior government officials early this week to propose the setting up of a SPV, solely to import HRCs and downstream products into Malaysia.

The report, quoting sources, said three models are expected to be proposed by Megasteel, one of which will involve the government taking a 60% equity interest in the SPV and Megasteel the remaining 40% stake.

Calling the proposal "preposterous", Misif president Datuk Soh Thian Lai came out against the move, saying it is "neither feasible nor implementable and will cause irreparable damage to the whole Malaysian iron and steel industry".

He said, among other things, the establishment of a SPV is an infringement of the Malaysian Competition Act 2010, especially on abuse of dominant position as Megasteel has associated companies that are also competing with companies down the value chain, which are users of the imported products.

Soh said the confidentiality of users' information is at risk as the SPV company will know who is the foreign producer and the pricing, creating an unfair advantage for Megasteel over the other product manufacturers.

In today's statement, Megasteel also clarified that it is not a monopoly as claimed, adding that there is more than one company producing HRCs in Malaysia, namely Southern Steel Bhd.

"Contrary to the picture painted by Misif, Megasteel is not the only steel company that is affected by the excessive steel imports and submitting trade remedy petitions," it added.