Malaysia Steel Industry

Posted on 28 September 2007

Malaysia's steel consumption has expanded robustly over the years to become the second largest steel consumer in ASEAN region, just after Thailand. However, it is the country's strong crude steel production that has made it the largest crude steel producer in the region and the only country that has the capability to export crude steel product.

Production of crude steel reached 5.8 million tonnes in 2006, an increase of 10% over the previous year. Malaysia exported a total of 724,608 tonnes of billet in 2004, compared to a mere several thousand tonnes three years before. Due to an increasing domestic demand, Malaysia's export of billet has gradually slowed down to 270,748 tonnes in 2006. The main export destinations are the ASEAN countries, especially to Vietnam, Indonesia and Thailand.

Malaysia consumes a lot of scrap each year. The highest record was registered in 2003 at 6.6 million tonnes, out of which more than 5 million tonnes were from import. The amount has declined gradually since then and in 2006, 4.6 million tonnes of scrp were consumed. Malaysia has two producers of scrap-substitutes-Perwaja Steel (DRI plant) and Amsteel Mills (HBI plant). Total capacity is 1.9 million tonnes. Current production is 1.28 million tonnes (2006 figure). Hence, the mills have the capacity to pump up their production to replace scrap consumption when necessary, especially when scrap prices surge up steeply. 

There are a total of 6 billet producers with capacity of 5.25 million tonnes a year, the highest among the ASEAN countries. There is only one slab producer with a capacity of 2.5 million tonnes a year. Its output has been high and reached 2 million tonnes in 2006. Nevertheless, Malaysia still has to import slab to meet the needs of re-rollers.

Finished steel production in Malaysia is, like other countries in ASEAN, dominated by long products with total output of 3.47 million tonnes in 2006. Taking into consideration the total long product capacity of 6.14 million tonnes a year, there is still substantial room for domestic producers to expand their output. Malaysia is also an exporter of long products, especially bar and wire rod. Export of bar has moved up robustly from 136,415 tonnes in 2005 to hit 204,787 tonnes in 2006. The main export destinations are Singapore and Australia. Wire rod export volume has also remained high with 172,173 tonnes exported in 2006, mainly to Indonesia, Singapore and USA.

Flat product output has expanded robustly at the rate of 30% y-o-y in 2006 to reach 2.24 million tonnes. Plate production surged up by 18.5% in 2006 to hit 320,000 tonnes, owing to a boost in output by Jikang Dimensi, the largest plate producer in the country. Domestic output of hot rolled coil also rose sharply by 32% to reach 1.92 million tonnes in 2006. Similarly, production of cold rolled sheet saw a mark increase of 22% to 648,000 tonnes in 2006. However, coated sheet production slowed down from 606,200 tonnes in 2005 to 580,980 tonnes in 2006. In view of slowing demand of flat product in Malaysia, domestic producers have been focusing on the export market, especially in 2006. Plate export has doubled from 90,000 tonnes in 2005 to nearly 180,000 tonnes in 2006. Likewise, export of hot rolled coil surged up by 77% to reach 937,857 tonnes in 2006. Just like the case of long products, ASEAN countries remain the main market for Malaysia's flat product, particularly Vietnam and Singapore. USA has also emerged as a major importer of Malaysian hot rolled sheet and plates over the last few years.

As for finished product imports, Malaysian imports of steel are mainly quality steel products or special grade steel, the volume of which has remained stable over the last three years. The main sources of imports are Japan, Korea and Taiwan. However, imports from China have been increasing especially for wire rod and steel wire. Malaysia used to import substantial quantity of plate from China too, but the volume has declined sharply since 2001 due to increasing domestic supply.

A number of Malaysia's companies have announced plans to expand into upstream projects. Lion group plans to implement a new project with a DRI capacity of 1.54 million tonnes by 2008. Ann Joo (formerly Malayawata Steel) will set up a 500,000 tonnes blast furnace project. Melewar Group has also announced plans to build its own DRI as well as HR plant by 2009.

Unit: tonnes

    2005 2006 % Change
Scrap Production   1,440,000 1,600,000 11.11%
  Import    3,451,042 3,077,151 -10.83%
  Export         55,140 28,370 -48.55%
  Consumption 4,835,901 4,648,781 -3.87%
    2005 2006 % Change
Semi Finished Product Production   5,296,000       5,834,000 10.16%
  Import       469,082          405,005 -13.66%
  Export       495,067          270,748 -45.31%
  Consumption   5,270,015       5,968,257 13.25%
    2005 2006 % Change
Bar Production   1,770,000       1,942,000 9.72%
Import         81,000          132,324 63.36%
Export       136,415          204,787 50.12%
Consumption 1,714,585 1,869,537 9.04%
    2005 2006 % Change
Wire rod Production   1,240,000       1,175,000 -5.24%
  Import       192,618          238,849 24.00%
  Export       276,000          172,173 -37.62%
  Consumption 1,156,618 1,241,676 7.35%
    2005 2006 % Change
HRP Production 270,000 320,000 18.52%
  Import 210,000 268,149 27.69%
  Export 90,000 174,938 94.38%
  Consumption 390,000 413,211 5.95%
    2005 2006 % Change
Hot Rolled Coil Production   1,453,000       1,920,000 32.14%
  Import 820052.23 647253 -21.07%
  Export       528,996          937,857 77.29%
  Consumption 1,744,056 1,629,396 -6.57%

SEAISI, September 2007 

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