This report profiles Malaysia’s steel industry, discussing market trends through the second half of 2013 and the outlook for 2014. The report also profiles leading players in the industry Lion Corporation, Ann Joo Resources, CSC Steel Holdings, Southern Steel, and Kinsteel.

Malaysia’s apparent steel consumption rose by 8.3% from 8.24mn tons in 2011 to 8.92mn tons in 2012, mainly due to mega infrastructure projects under the government’s Economic Transformation Programme (ETP). However, domestic output declined by 3.1% to 4.95mn tons. Imports of steel products surged significantly by 15.6% to 5.42mn tons while exports declined by 7% to 1.45mn tons in 2012.

The local steel industry was severely affected by the influx of cheap imported steel products, which tend to reduce market prices. This was further compounded by the uncertainties in the economic recovery of the U.S. and Europe as well as the slowdown in the economic growth in China, the world’s largest steel producer; which led to the softening of international steel prices and volatile raw material prices. Under these tough market conditions, performances of steel companies generally declined. Most companies saw reduced sales volume and earning margins.

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% until 2020. More demand for domestic steel products is expected with the stepping-up of the implementation of various mega-projects under the ETP. With the pickup in demand growth momentum, coupled with expected lower raw material costs, steel companies should see better earnings next year.

Key points

• This report includes financial information and a comparative matrix for the leading players in Malaysia’s steel sector, among them Lion Industries Corporation Berhad, Ann Joo Resources Berhad, CSC Steel Holdings Berhad, Southern Steel Berhad (SSTEEL), and Kinsteel Berhad.

• In line with the rollout of the government’s mega infrastructure projects, Malaysia’s total steel demand was 8.9mn tons in 2012. Meanwhile, crude steel output fell 5.5% to 5.6mn tons.

• The performance of the local steel industry in 2013–14 will depend mainly on the rate of construction projects implemented under the government’s ETP. The MISIF expects domestic steel demand to grow at an annual average rate of 4%.

• Due to the scale of China’s production and Malaysia’s progressive liberalization policy, local steel players fear that an influx of imported steel products into Malaysia would continue to exert pressure on prices and margins.