Local steel prices will largely be influenced by supply from China, the world’s biggest producer of steel, according to the Malaysian Iron & Steel Industry Federation (Misif).
Its president Datuk Soh Thian Lai said that excess production resulted in the oversupply from China since 2012 as the government subsidised the operations of Chinese steel players.
“Steel mills in China hire a lot of people and thus the government there feels that it has to subsidise their operations.
“I don’t think the Chinese government will stop the subsidies any time soon as many people will be out of jobs. There are a lot of second and third-tier mills which are supported by the government,” Soh said on the sidelines of a Misif conference on the status and outlook for Malaysia’s iron and steel industry in Kuala Lumpur yesterday.
“China is very competitive in terms of raw materials and our prices are largely influenced by China, which sets the benchmark. I think current prices are already at rock bottom levels, and a majority of the mills in China are using iron ore while in Malaysia, a majority of mills use scrap (iron),” Soh said.
Iron ore prices in China, which at their peak was trading at US$180 (RM590) a tonne, is now hovering at US$80 (RM260).
On another note, Soh said steel consumption in Malaysia was expected to rise up to 10% every year until 2016 on demand from the construction industry backed by the slew of mega projects coming onstream such as the mass rapid transit and various property projects.
Malaysia’s steel consumption, which is the second largest after Singapore in Asean, is currently at 330kg per capita. Soh said he expected that after two years this figure would grow to 380kg per capita.
On the outlook for steel and iron ore prices, Ann Joo Steel Bhd managing director Datuk Lim Hong Thye said that prices were already bottoming out but whether they would rebound again was largely dependent on how China handled its global supply situation.
On a related matter, International Trade and Industry Deputy Minister Datuk Hamim Samuri said that the ministry would have to study the economic impact on local industries, namely construction, property and oil and gas, from the decision to impose anti-dumping duties on hot-rolled coils from China, Indonesia and South Korea.
Malaysia will impose anti-dumping duties of between 3.15% and 29.37% on hot-rolled coils imported from China, Indonesia and South Korea. The measure will be effective for not more than 120 days from today.
Source: The Star
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