Steel - Provisional Measure to Curb Wire Rods Dumping

THE BUZZ  

The  International  Trade  and  Industry  Ministry  (MITI)  yesterday  in  a  press  release  said the government has completed the preliminary anti-dumping investigations on steel wire rods  imports  from  China,  Taiwan,  Indonesia,  South  Korea  and  Turkey.  Further investigation  on  the  importations  of  wire  rods  from  the  alleged  countries  will  be carried out.  The  government  has  also  decided  to  impose  a  provisional  measure,  i.e.  a provisional  anti-dumping  duty  equal  to  the  amount  of  the  dumping  margin  determined through the preliminary investigations. Provisional anti-dumping duties ranging from 0% to 33.62% will be applied on imports from the alleged countries and shall be effective not more than 120 days from the date of the Government Gazette. The final determination will be made based on the outcome of the verification visits to foreign producers’ premises  no  later  than  120  days  from  the  date  of  the  preliminary  determination  notice report.

OUR TAKE  

A  quick  recap.  MITI  on  28  May  2012  received  a  petition  from  domestic  producers alleging  that  steel  wire  rods  from  Taiwan,  China,  Indonesia,  South  Korea  and  Turkey were  imported  into  Malaysia  at  much  lower  prices  than  the  domestic  prices  in  those respective  countries.  The  petitioners  claim  that  this  is  causing  material  injury  to Malaysia’s domestic industry. MITI has since initiated preliminary investigations on such imports  and  studied  the  feasibility  of  imposing  anti-dumping  duties  on  steel  wire  rod imports.

Provisional  measure  welcomed.  While  the  government  may  need  more  time (maximum  120  days)  to  reach  a  final  determination,  we  welcome  the  provisional measure  that  will  now  require  importers  of  wire  rods  to  pay  a  provisional  anti-dumping duty  ranging  from  0%  to  33.62%  guaranteed  by  a  security  equal  to  the  amount  of  the dumping  margin  determined  through  MITI’s  preliminary  investigations.  We  believe  this will be a deterrent to any non-genuine imports of wire rods, as importers face the risks of their deposits being forfeited should the government find sufficient evidence of dumping activities in its final determination.
 
Maintain  NEUTRAL.  Meanwhile,  wire  rods  imports  jumped  substantially  to  474,561 tonnes  in  2011,  based  on  data  compiled  by  the  Malaysia  Iron  &  Steel  Industries Federation.  The  implementation  of  the  provisional  measure,  which  should  curb  import levels,  certainly  brings  cheer  to  local  wire  rods  manufacturers  such  as  Lion  Industries, Southern  Steel,  Kinsteel  and  Ann  Joo.  Nonetheless,  sources  revealed  that  wire  rods imports  have  reduced  since  the  petition  was  submitted  to  the  government,  thus  we expect  little  impact  from  the  proposed  duty  imposition.  Furthermore,  we  see  limited recovery in local steel prices despite international steel prices having since rebounded in the  past  couple  of  weeks,  as  domestic  long  steel  products  prices  have  been  relatively firmer than international prices in the recent down cycle. In addition, some quarters may hold  on  to  their  shares  on  expectations  that  the  Economic  Transformation  Programme (ETP)  projects  will  spur  demand,  despite  the  disappointing  financial  results  from  steel companies.  Hence,  local  steel  counters  are  trading  at  some  premium  to  their  regional peers. With that, we maintain NEUTRAL on Malaysia’s steel sector.

Source: OSK