Misif: Steel demand to slow down this year

Posted on 28 September 2018

Source: The Sun Daily

The Malaysian Iron & Steel Industry Federation (Misif) is seeing a slowdown in steel demand this year due to the review of infrastructure projects by the government, said Misif president Datuk Lim Hong Thye.

He personally estimated a 5% slowdown in the demand for construction steel this year.

“This year, we see steel demand slowing mainly because of our domestic issues. The government is reviewing infrastructure projects, which slows down demand. The direct impact from US President Donald Trump’s actions is not that serious (on the slowdown in steel demand),” Lim told a press conference at the 13th Conference on Status & Outlook of the Malaysian Iron and Steel Industry today.

He said many steel producers have prepared for the expected growth in domestic demand this year but suddenly demand slowed, causing producers to turn to export. Lim hoped that local demand can increase as domestic sales provide the highest margin to producers, saving from shipping and logistics costs compared with export.

”While businesses are cautious and adopting a wait-and-see approach from the forthcoming Budget 2019, we hope that mega government-led infrastructure development and property projects can be approved for commencement soon, as catalyst for a buoyance steel consumption in the country. The third national car project to build a regional automobile also adds optimism to the steel sector as well,” said Lim.

Malaysia’s steel consumption was 9.4 million MT in 2017. Misif is optimistic that the country can achieve higher growth beyond the “physchological threshold” of 10 million MT, a mark that Malaysia consistently achieved for three years prior to 2017. Malaysia’s steel consumption is projected to grow to 11.7 million MT and 12.4 million MT by 2020 and 2025 respectively, amid global challenges and disruption.

“Currently due to domestic and international issues, steel price in Malaysia is at a suppressed level. We don’t see any more room for steel price to go down. When the business sentiment improves, we expect the price will move to a fairer level compared to the international price,” said Lim.

Describing the global trade war as a “double-edge sword”, Lim said the situation can be an opportunity for Misif members. With US slamming a 50% tariff on Turkish steel, he said Malaysian steel can be more competitive than Turkey in terms of exports to US.

Deputy International Trade and Industry Minister Dr Ong Kian Ming instead urged domestic steel producers to diversify and move from construction-centric steel producers towards producing specialty steel and higher value added steel with high impact growth such as automotive, electrical & electronics, machinery & equipment and oil & gas.

He said the government urged the industry to consider consolidation, merger & acquisitions and partnerships with strategic parties, and proposed that the industry work with government agencies to identify the required technology, business opportunity and partnerships with sector-specific companies.

Ong also said incentives for Industry 4.0 will be included in Budget 2019, adding that the government will roll out the National Industry 4.0 Blueprint this year to enable digital transformation of the manufacturing and related services sector. 

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