Posted on 10 Dec 2021
Eastern Steel is embarking on its project to produce hot rolled coil in Malaysia, Kallanish notes. The producer has started foundation work to raise steelmaking capacity to 2.7 million tonnes/year. It is currently producing around 700,000 t/y of semis at its blast furnace plant in Kemaman, Terengganu.
The MYR 3 billion ($712 million) expansion will involve adding a second blast furnace and adding a new 2m t/y strip plant. The capacity of the blast furnace is likely to be 1,380 cubic meters but this has not been finalised. Piling work on the plant will commence in the first quarter of 2022. The proposed HRC plant is targeted to start operation in the third quarter of 2023, Kallanish understands.
The company’s main shareholder, Shanxi Jianlong, injected CNY 500m ($78.8m) cash last month into Eastern, which raised its equity share to 68.8%, from 60% previously. As a result, Malaysian partner Hiap Teck’s shareholding in Eastern fell to 27.3% from 35%, and minority shareholder Chinaco Investment’s stake was lowered to 3.9% from 5%.
The Kemaman plant is currently operating at a utilisation rate of more than 110%. It exports about 70% of its products, with China the main recipient accounting for 30% of total exports. Shipments to Indonesia, Thailand and Taiwan account for a combined 40%.
Eastern plans to sell most of its HRC output domestically. Malaysia currently imports 1.6m t/y of HRC. Hiap Teck also plans to use the HRC as feedstock for its pipemaking operations. Shanxi Jianlong, whose parent company is Beijing Jianlong Heavy Industry, acquired a controlling stake of 60% in Eastern Steel, which enabled Eastern to resume slab production in July 2018.
Malaysia's HRC requirement was previously served by sole producer Megasteel, which ceased operations in 2016 owing to financial constraints. Megasteel's assets were later sold to sister company Lion Industries Corp. Lion announced earlier this year it was aiming to restart HRC production by year-end. "There is market chatter that this project will resume in March 2022," a Malaysian industry source says. Sources at Lion, however, say there are no updates on this as of 9 December.
Source:Kallanish
