- The Star reported that the Malaysian government will
likely impose anti-dumping duties on the importation of wire rods.
- The new regulations could be introduced by 19 February
next year if the government is satisfied with an ongoing probe into dumping
activities that are causing material injury to steel players.
- A provisional anti-dumping duty ranging from nil to 33.62%
would be applied on imports from the alleged countries.
- The decision was made after the International Trade and
Industry Ministry (MITI) concluded an investigation into a petition alleging
that imports of wire rods originating from China, Taiwan, Indonesia, South
Korea and Turkey were priced lower than the domestic market.
- Recall, the government had initiated the investigation
based on a petition filed by Amsteel Mills Sdn Bhd – a unit of the Lion Group –
on behalf of the domestic wire rod makers. The petition was filed on May
28.
- The move comes after the Malaysian government had in June
imposed stricter licensing requirements on the importation of eight tariff
lines for alloy steel products (HS 7225) effective from June 15 onwards.
- Taken together, we believe these latest measures form part
of the Malaysian government’s strategies to negate the threat of rising
competition from cheap imports.
- In particular, we understand that boron-added steel
imports from China are brought in by domestic traders/stockists under alloy
tariff codes that are duty-exempted. This is further exacerbated by the rebates
accorded by the Chinese government for higher-value added steel exports.
- More importantly, we expect domestic long steel players to
be the big beneficiaries of these anti-dumping duties, particularly for Ann Joo
Resources and Lion Industries. Our channel checks indicate that wire rods
account for up to 30% of the total product mix of local integrated producers of
long steel.
- We maintain our OVERWEIGHT stance on domestic steel
makers. We expect local steel makers to start benefiting from a resurgence in
domestic steel usage from 2013 onwards whereby several catalytic projects are
shifting into a higher gear (e.g. Sg.Buloh-Kajang MRT project, Klang Valley LRT
Extension) along with sustained property launches.
- Ann Joo and Lion Industries remain as top picks within the
sector.
Source: AmeSecurities
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