Posted on 06 Aug 2025
This article first appeared in The Edge Malaysia Weekly on July 28, 2025 - August 3, 2025
AMID the focus on the impact of US tariffs on trade, a clampdown on steel imports from Malaysia, Vietnam and Indonesia by the Mexican government in mid-May has compounded the local steel sector’s woes.
A series of announcements by Mexico’s Secretary of Economy Marcelo Ebrard, beginning in January, culminated in a measure to ban steel imports from the three Southeast Asian countries, citing alleged transshipment of Chinese steel through these nations.
Between mid-May and early June, several steel mills — including those in Malaysia — were reportedly removed from Mexico’s list of approved exporters.
In an email response to questions from The Edge, the Ministry of Investment, Trade and Industry (Miti) says, “We have reached out to our Mexican counterparts and are still waiting for their confirmation on this matter. Any further discussion based on any specific trade platform’s mechanism or any other follow-up action on our part will have to be based on this initial confirmation.”
One of the affected steel players, Bahru Stainless Sdn Bhd, has denied allegations of “triangulation” and decried its removal from the list of approved exporters. CEO Danny Tan Wei Beoh says the company sources its raw materials solely from Japan, which is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), before processing and exporting them to Mexico.
“We can only buy Japan stainless mill materials from Nippon and from JFE, reprocess and sell to Mexico. Without CPTPP, Bahru Stainless will lose another important export market,” Tan tells The Edge.
“We need the government to step in to speak and negotiate with the Mexican government.”
He says the company had planned to export 5,000 tonnes of steel to Mexico.
“If we have proof that we bought 5,000 tonnes of raw materials, then that will be proof that our export to Mexico must have the CPTPP certificate.
“As we are aware, the Malaysian government is not protecting the steel and stainless steel industries. We will need other markets, such as Mexico, to export our products to,” he adds.
How important is the Mexican steel market to Malaysia? Data published by cross-commodity price reporting agency Fastmarkets shows Malaysia exported more than 358,000 tonnes of steel to Mexico in 2024 — more than three times the volume in the previous year. However, this represents just a fraction of Mexico’s total steel imports of 17.6 million tonnes in 2024, according to the World Steel Association.
Bahru Steel, Mycron Steel Bhd and CSC Steel Sdn Bhd, a unit of CSC Steel Holdings Bhd, have written to the Malaysian Iron and Steel Industry Federation (Misif), describing the removal of the Malaysian mills from the list as “abrupt” and being carried out without “prior notice” or an opportunity to respond.
“This sudden delisting has had a significant impact on our operations as legitimate manufacturers and poses a serious threat to both our current and future trade prospects in the Mexican market,” the May 26 letter reads.
In response, Misif submitted a letter to Miti requesting that the government look into the matter, including engaging with the Mexican authorities to reverse the delisting decision, establishing a transparent and equitable mechanism for affected mills to appeal or reapply for inclusion on the approved list, and ensuring continuity for in-transit shipments to mitigate further economic losses for both exporters and importers.
In the May 27 letter, Misif says the affected steel manufacturers have consistently demonstrated compliance with the CPTPP rules of origin. Both Malaysia and Mexico are members of the CPTPP.
Misif adds that its certificates of origin are verified and endorsed by Miti, affirming that no Chinese-origin steel was used in the products exported to Mexico, one of Latin America’s largest economies. “The deregistration not only disrupts ongoing trade but also shakes confidence in the fairness and reliability of cross-border engagements under international trade frameworks.
“We understand that the delisting may stem from unverified allegations that Malaysia and Vietnam serve as transshipment points for Chinese-origin steel. This has led to the blanket removal of nearly all Malaysian and Vietnamese manufacturers, except for a single Malaysian HRC (hot rolled coil) producer, regardless of their operational model or proven compliance records.
“Such action taken without investigation or due process effectively penalises compliant exporters, undermines the principle of fair trade and runs counter to the commitments made under the CPTPP, where Malaysia and Mexico, as signatories, have both committed to upholding transparent and equitable trade practices. The current situation represents a clear deviation from these principles,” Misif says in the letter.
According to data published by Trading Economics, which draws its data from the World Bank, the International Monetary Fund, national statistical agencies and central banks, Malaysia’s exports of iron and steel to Mexico amounted to US$221.02 million (RM933 million) in 2024, relatively small compared with its total exports to Mexico of RM18.86 billion.
Nevertheless, companies such as Mycron, which recently expanded into the Mexican market, now face serious disruptions.
In its financial year ended June 30, 2024 (FY2024), the company posted its highest-ever annual revenue since going public in 2004, thanks to growing overseas sales. In FY2024, foreign sales, mainly to Mexico, accounted for about 30% of the company’s total revenue of RM241.82 million, according to Mycron in an interview with The Edge last November. This was more than seven times the RM33.96 million, representing 6.3% of total revenue, recorded in FY2023.
When contacted, Mycron group CEO Roshan Mahendran Abdullah, who is also president of Misif, emphasises that all products exported to Mexico were manufactured entirely in Malaysia and that the company was not involved in any transshipment or rerouting of third-country origin materials.
“While we understand the broader geopolitical and regulatory context behind such measures, we firmly reject any suggestion that Mycron has engaged in such practices. Every shipment to Mexico was accompanied by a Certificate of Origin issued by Miti, in full compliance with CPTPP requirements.
“In anticipation of origin compliance concerns, we have long maintained a robust system of internal controls, including full heat-number traceability for every coil and production batch, mill test certificates linked to verified manufacturing output and a secured documentation chain that ensures transparent and auditable origin verification,” he tells The Edge.
“At the policy level, we believe Malaysia would benefit from a national steel traceability registry supported by digital verification systems and regular certification audits. Such measures would protect compliant manufacturers from being caught in wide-net enforcement actions and help reinforce Malaysia’s reputation as a credible and responsible trading partner.”
Malaysia’s steelmakers say they are already under pressure from an influx of cheaper imports, particularly from China and Vietnam, which has eroded domestic market share and squeezed margins. The latest trade restrictions from Mexico — one of Malaysia’s key growth markets — risk compounding these challenges.
Source:The Edge
