This report profiles Malaysia’s steel industry, discussing market trends and outlook through 2014 and into 2015 and beyond. The report also highlights key leading players in the sector including Lion Industries Corporation Bhd, Ann Joo Resources Bhd, CSC Steel Holdings Bhd, Southern Steel Bhd, and Kinsteel Bhd.

Malaysia is the fourth largest steel consuming country in ASEAN with a domestic steel consumption of 10mn tonnes in 2014, a marginal growth of 0.3%, driven by the government’s mega infrastructure projects. However, the growth in consumption was mostly served by imports as domestic output stagnated and total imports increased by 11%, while exports surged by 31%.

The local steel industry continues to be hampered by the influx of cheap imported Chinese steel products which has depressed domestic selling prices. This is further compounded by the global oversupply situation and sagging demand spurred by China, the world’s largest steel producer, which has led to shrinking world steel prices. In addition, the recent hike in electricity and gas tariffs has driven up operation costs of the steel industry. Under these sluggish market conditions, performances of domestic steel companies generally declined. Most companies saw reduced sales volume and margins erosion.

According to the Malaysian Iron and Steel Industry Federation (MISIF), the domestic steel industry, in consumption terms, is expected to grow at an annual rate of 4% from 2015 to 2018. Nevertheless, the outlook for the Malaysian steel industry is expected to be tough with uncertainties in the operating environment. The positive impact of mega-projects will generally be offset by stiff competition and soft external outlook. Moreover, local steel producers will only fully benefit from the growth in demand of steel if the anti-dumping duties and steel policy imposed by the government are implemented effectively.

Key Points:

• The iron and steel industry is a core sector that tracks and closely supports Malaysia’s overall economic growth, contributing around 4% to the GDP.

• In line with the roll-out of the government’s mega infrastructure projects, Malaysia’s total steel demand is expected to grow at an annual average rate of 4% until 2018.

• Malaysia is becoming a greater net importer of steel products, with China being the largest origin of steel import with a steep increase of 45% in 2014. Total iron and steel products import increased by 11% to 7.7mn tonnes in 2014, mainly due to China imports.

• Due to the scale of China’s production and Malaysia’s progressive liberalisation policy, local steel players continue to suffer from the increasing dumping of cheap imported Chinese steel into Malaysia, which has slashed prices and margins.