By KEVIN WONG / Pic By MUHD AMIN NAHARUL
The ongoing trade war between the US and China could impact Malaysian industries as there is a very high possibility of the dumping of foreign goods in the country.
International Trade and Industry (MITI) deputy minister Dr Ong Kian Ming (picture) said there are concerns that Malaysia would be used as a transshipment point.
“These two things will have detrimental effect on our industries which include the steel industry,” he told reporters at the Malaysian Iron
and Steel Industry Federation (MISIF) conference on status and outlook of the country’s iron and steel industry yesterday in Subang Jaya.
Ong said the ministry is monitoring the trade statistics while working together with MISIF and other stakeholders to gain information and take the appropriate action when needed.
“We will investigate whether it is anti-dumping or to ensure Malaysia is not used as a transshipment point by other countries in ways that will affect the local steel industry,” he said.
He said he does not want Malaysia to be used as a hub for trade circumvention.
When asked about the slow demand of steel domestically, Ong said it was possibly due to the postponement of some large-scale infrastructure projects.
“The postponements would be beneficial in a long term as the government is striving to sustain economic growth for the next five years and beyond.
“In addition, this is to have a more balance approach and a well distributed economic growth as we want the local steel sector to expand in different areas and not just be overly dependent on one or two mega projects,” he said.
Ong said he is optimistic that the construction, property and automotive sectors will experience much steadier growth in 2019.
MISIF president Datuk Lim Hong Thye, on the other hand, said the US-China trade war is a double-edged sword for Malaysia as it can provide new opportunities for local steel players.
“I encourage MISIF members to look at this trade war with a more positive perspective and to explore new areas which could create positive impacts to the industry,” he said.
According to Lim, it could be an opportunity for MISIF members to look at exports to America as it has doubled its tariffs to 50% on steel imports from Turkey.
Lim, however, said the impact from US President Donald Trump’s actions have slowed down steel products from Turkey coming into the country.
“Should the import and dumping of Turkey’s steel products persist, we will file action with MITI’s trade practice section,” he said.
He said because Turkish’s steel products have been prohibited from entering into America, some MISIF members have started to export steel to the US.
In terms of outlook of steel prices, Lim said the domestic selling price for steel rib is lower than China, which is 4,700 yuan (RM2,820) per tonne, whereas Malaysia is at RM2,300 per tonne.
“This is due to the cost pass-through mechanism which adds 8% to 16% on electricity tariffs for industry players.
In addition, the electrode, one of the key components to melt scrap, is expensive and scarce.
“Also, with the cost-push effect, I certainly do not see any more room for steel prices to go down. However, when business sentiment improves, we expect the price will go to a fairer level compared to the international price,” he said.