Source: The Borneo Post
The Malaysian steel industry will continue to be safeguarded from global competitors as the government has decided that it will be extending the existing safeguard measures Steel Concrete Reinforcing Bar (Rebar) and Steel Wire Rods and Deformed Bar in Coils (SWR and DBIC) for another three years.
To note, the International Trade and Industry Ministry (Miti) announced that in accordance with Section 25 of the Safeguard Act 2006, the government had made a final decision to continue imposing these definitive safeguard duties following the conclusions of its investigations on the effects of increased importation of Rebar and SWR & DBIC on the domestic industry.
The investigations were previously prompted in May last year when the Malaysia Steel Association (MSA) filed a petition on behalf of the domestic industry alleging that the increased importation on both products into Malaysia had previously injured the domestic industry seriously.
Even if Chinese steel prices were to decrease as a result of slower construction activities in China, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) reckoned that the import duties would still be highly effective in maintaining the attractiveness of local steel products.
The lower Chinese imports would also allow local steel makers to maintain their margins in spite of higher raw materials costs in FY17 by passing the incremental costs onto end users instead.
“Hence, moving forward, we believe the local steel prices will continue to remain resilient with long steel prices averaging above RM2,000 per tonne.
“This will translate into sustainable earnings for local steel makers as the current health trading levels of RM2,100 to 2,250 per tonne can be maintained,” opined the research arm.
Additionally, long steel demand is also set to pick up in the second half of 2017 (2H17) as infrastructure projects commenced in 2016 are beginning to progress into more advanced stages.
According to Miti, the decision came into effect yesterday (April 14) and for the first year, both Rebar, SWR and DBIC will maintain their import duties of 13.4 and 13.9 per cent respectively.
The rates will then decreased in subsequent years with rebar’s import duties reduced to 12.27 per cent on April 14, 2018 and 11.1 per cent on April 14, 2019.
Similarly, SWR and DBIC’s import duties will also be reduced to 12.90 per cent on April 14, 2018 and 11.90 per cent on April 14,
Overall, response of the development has been highly positive for local steelmakers as the safeguard measures will continue to deter imports and serve as an additional barrier for Chinese Steel to our local shores.