Malaysian steel mills are being encouraged to adapt to changes in the global trade landscape, according to Dato’ Lim Hong Thye, president of the Malaysian Iron & Steel Industry Federation (Misif). The imposition of Section 232 tariffs could be positive for Malaysian steel mills, Lim told Kallanish on the sidelines of the federation's annual Malaysian steel industry seminar.

Turkish rebar imports into Malaysia have noticeably risen. This is mostly due to the weakness of the Turkish Lira, says Lim. But this is not expected to be sustainable in the long term, because Turkish mills will face higher imported input costs, for example.

In the medium term, Malaysian steel mills could find it easier to penetrate the US steel market because of the imposition of a 50% duty on steel imports from Turkey, Lim says. In the longer term, should Section 232 remain in place, Malaysian steel mills could benefit if downstream steel-using industries in China choose to relocate to Southeast Asia including Malaysia.

The Malaysian domestic market is currently weak due to delays in construction projects amid a transition of the Malaysian government. The prevailing price for rebar of 16mm and upwards is MYR 2,300/tonne ($555/t). Since Turkish rebar is currently priced at around $550/t cfr Malaysia, it is unlikely that Malaysian importers would book any more Turkish material, Lim notes.

Malaysia’s apparent steel consumption reached 9.4 million tonnes last year, of which 43.3% were for flats, and the remaining 56.7% for longs. Misif is optimistic that this will rise to 10mt this year, Lim said in his welcome address. Misif projects that steel consumption will reach 11.7mt in 2020 and 12.4mt in 2025.

Malaysian iron and crude steel production capacities last year were 5.1 million tonnes/year and 12.4m t/y respectively. Last year, Misif members produced 3.21mt of billet, 3.57mt of longs and 887,466t of cold rolled products, which represented capacity utilisation rates of 38%, 39% and 31% respectively. There is no domestic production of hot rolled flat steel in Malaysia.