The exemption of large international steel players from anti-dumping duties, announced today, has led to skepticism over the impact of the policy.
“We are of the view that the implementation of the import duties is seen to be incomplete as there are still three major foreign steel producers will not be taxed.
“Our local steel players will still have to struggle to compete with these major foreign steel producers which have capacity to dump their steel products at very low prices into Malaysia,” MIDF Research analyst Iqbal Zainal said. MIDF is neutral on the move.
The Ministry of International Trade and Industry (Miti) announced that anti-dumping duties will be imposed on several wire rod exporters from China, Taiwan, South Korea and Indonesia.
However, Chinese steel giants Jiangsu Shagang International Trade and Jiangsu Yonggang Group plus Indonesia’s PT Ipsat Indo are exempted from the duties.
Also exempted are Turkish steel exporters, which Miti said are left out as their margins are less than two percent.
The Shagang group is a Fortune 500 company with a turnover of US$33.2 billion (RM102.9 billion) while Yonggang produced 5.26 million tonnes of finished steel in the first nine months of 2012 alone.
“These companies have large economies of scale and can produce (wire rods) for cheaper than even steel bars, which is higher in the production chain,” another analyst familiar with the industry said.
“It’s unclear why these companies have been exempted but it indicates a very strong lobby from China.”
Wire rods are predominantly used in construction, he said, and the duties will not stop builders from sourcing cheaper imported steel, particularly from these exempted companies.
Affin Investment Bank, however, views the moves as a positive for the steel industry.
“The beneficiaries are the long steel players, namely Kinsteel, Ann Joo Resources, Southern Steel and Lion Industries.
“The move could also be an impetus for the government to impose similar measures on other steel products, namely steel bars, which makes up the bigger portion of the long product consumption,” its analyst Sharifah Farah said.
Meanwhile, Lion Group’s Amsteel Mills which initiated the petition said the move was direly needed as local players were “badly affected” by the wire rod dumping.
“(It) shows that government’s intent and seriousness to provide a level playing field for the local steel industry which has the capability and capacity to supply the local and export markets with high quality steel products,” a company spokesperson said.