KUALA LUMPUR: The Ministry of International Trade and Industry’s (Miti) removal of duty exemptions for the import of 18 steel grades is seen as an anti-dumping measure that will yield positive results for local steel manufacturers.
“The key intention ... is to restrict the import of cheap steel into Malaysia, especially low-quality products which affect the local players,” a steel analyst at RHB Research told The Edge Financial Daily.
Alongside the removal of duty exemption, Minister Datuk Seri Mustapa Mohamed said in a statement on Tuesday the government will focus on the enforcement of mandatory standards to prevent below par products from entering the local market, adding that appropriate measures would be taken to counter unfair trade practices.
In a brief statement issued on Wednesday, the Malaysian Iron and Steel Industry Federation (Misif) said it would fully support Miti’s affirmative measures, adding that the association is “confident that such measures would further promote the development of the domestic steel industry”.
The statement of support from Misif, whose members are mostly downstream players, comes even though the measures may primarily benefit upstream players, such as Lion Group’s Megasteel Sdn Bhd, for now because the affected steel products that are imported may include a wide range of hot rolled coils (HRC) that Megasteel also produces locally.
In essence, the measures will result in more stringent controls on imported HRC product coming into local market. This could be seen as negative for downstream players, such as cold rolled coils (CRC) and steel welded pipes manufacturers, which use HRC as a raw material to produce their products.
Nonetheless, RHB Research is of the view that the government is starting a protectionist trend, and the import restriction will eventually benefit a broader segment of the local steel industry.
“The government may eventually extend the protection measure to downstream players by restricting imported finished steel products in the latter stage of the restructuring process,” said the analyst.
“We see this protectionist trend from the government in its bid to restructure the entire value chain of the steel industry, which will also have positive implications for downstream players over the longer term.”
24 Jan 2013
By Madiha Fuad
Source: The Edge Malaysia
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