- The Star reports today that the Malaysian Iron and Steel
Federation (MISIF) and Malaysia Steel Association (MSA) have joined ranks to
seek the federal government’s intervention in providing a mechanism to regulate
the level of steel imports in Malaysia.
- Among others, both MISIF and MSA are appealing to the
government to strengthen its policies in following areas:-
- Policies governing
steel imports for re-exporting purposes;
- The licensed
manufacturing warehouse status; and
- Zero import duty of
foreign finished products and steel grades not locally produced in
Malaysia.
- To this effect, both parties are pushing for the formation
of a Malaysia Steel Institute, which is supposed to act as an independent body
that will give recommendations to the Malaysia International Trade and Industry
Ministry (MITI).
- An immediate area of concern is the influx of cheaper
imports of ‘boron-added’ steel products. Essentially, this has caused many
locally-manufactured finished steel products still unable to compete against
similar imported finished steel products, which have a zero import duty.
- Under Malaysia’s national steel policy, only manufacturers
are eligible to apply for duty exemption. While Malaysia has yet to impose any
form of anti-dumping duties to circumvent this problem, some of its ASEAN
neighbours such as Thailand have resorted to imposing an anti-dumping duty of
19% under non-tariff barriers on such steel imports from China.
- We reckon that the situation is more pronounced,
especially when stacked up against cheap imports especially from China, which
come under the guise of boron-added steel products under alloy tariff codes,
for which such items are duty-free when brought in by traders and
stockists.
- To be sure, The Star report quoted the Lion Group as
saying that its unit Megasteel has been overwhelmed by imports of both
hot-rolled coils (HRC) and cold-rolled coils (CRC).
- As such, we prefer the long-steel players where the threat
of cheap imports are less pronounced, while domestic steel consumption should
see a pick-up in demand with the select roll-out of infrastructure products
(e.g. Klang Valley MRT) under the government’s ETP programme. Our top picks are
Ann Joo Resources and Lion Industries
Source: OSK188
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