Posted on 19 Jan 2021
Malaysia’s Ministry of International trade and Industry (Miti) has reportedly reassured the local steel industry that it will make a series of changes to policies in 2021. In particular, the revisions would make it harder to establish new plants, harder to export ferrous scrap and extend import duties, Kallanish notes.
A letter sent to the industry in December includes six specific measures, according to Malaysia business journal The Edge. Miti said it would tighten conditions to secure new manufacturing licences, extend import duties currently in place until the end of 2021, and impose a 15% export duty on ferrous scrap.
It also said it would make options available for imports to be free of duties if intended for re-export through a licenced warehouse and free-zone system. Finally, it promised to impose stricter standards on issuing licences for scrap processors, and would only allow consumers to import scrap, not traders. In addition, Miti said that measures imposed for 2021 could then be considered for inclusion in Malaysia’s New Industrial Master Plan 2021-2030.
The Malaysian steel industry has been put under significant pressure from growing capacity, with new plants commissioned over recent years pushing existing players into losses. Plans for new large-scale steelworks have also drawn opposition from existing players. In particular, a proposed 5 million tonne/year Chinese-invested steelworks in Samalaju. The status of this plant remains uncertain, however, as it received some approvals to proceed in 2020.
The opposition to large-scale capacity has apparently not stood in the way of plans to revive the idled Megasteel hot rolled coil plant with a new 3m t/y blast furnace-based steelworks. Megasteel was previously the only HRC producer in the country, but the plant still had to close in 2016 after successive losses.
The move to protect against scrap exports has also been an important recent focus for local steelmakers. As China is now allowing the importation of scrap, Asian scrap markets are expected to become much tighter. Malaysia would still rely on scrap imports if it plans to increase steelmaking capacity. Keeping domestic scrap for local use may provide some relief to local consumers from aggressive international markets.
Source:Kallanish
