Executive Interviews

Asian Metal: Welcome to our interview Mr. Tan. Please briefly introduce your company.

Mr. Tan: Our company was founded in 2006 and is located in the southernmost state of Johor, Malaysia, adjacent to Singapore. At present, the company mainly engages in the processing of wire rod and rebar, and processes materials to certain sizes according to customers’ requirements, with a monthly sales volume of about 1,500 tons.

Asian Metal: Where does your company primarily purchase materials? What is the current production situation of steel mills in Malaysia?

Mr. Tan: Our company basically does not import at present because the supply of domestic steel mills like Alliance Steel is sufficient. In addition, the exchange rate of the Malaysian Ringgit has been unstable in the recent year, so the risk of imports is quite high. Considering the recent high prices of raw materials such as iron ore and steel scrap, but the lack of significant improvement in downstream industry demand, the production enthusiasm of steel mills in Malaysia such as Alliance Steel, Southern Steel, Lion Industries, Ann Joo Resources, and Malaysia Steel, has not been very high recently. As far as I know, their overall operating rate is only about 50%.

Asian Metal: At present, China's export prices of construction steel do not have any advantages in the international market, so the exports are relatively difficult. Have Malaysia's imports from China also decreased?

Mr. Tan: It's true. In the recent years, Malaysia has indeed imported much less steel products from China. In terms of our current supply, in addition to our domestic Alliance Steel, we also have import business with Dexin Steel from Indonesia. Due to the issue of logistics distance, the shipping cost in China is relatively higher, and the price is not competitive. For example, the current export price of wire rod from Indonesia's Dexin Steel is USD560/t CFR Malaysia, while the export price in China is USD560/t FOB China.

Asian Metal: What is the current situation of Malaysian domestic construction steel market?

Mr. Tan: Construction steel prices in Malaysia also witnessed a downward trend these days discouraged by decreased raw material prices and weak demand. For example, the current mainstream market prices of wire rod and rebar stand at about MYR2,800-2,850/t and MYR2,750-2,800/t respectively, both down by more than MYR50/t in the past one month.

Asian Metal: Since the beginning of last year, Chinese construction steel prices kept declining. Have the prices in Malaysia also been affected to some extent?

Mr. Tan: China is the world's largest producer and consumer of steel, and in terms of geographical location and market linkage, Chinese market prices will definitely have a certain impact on the Malaysian market. As far as I know, the domestic demand for steel in China, especially the demand for construction steel in the real estate market, has been relatively slow in the recent year, and the overall market prices have also shown a downward trend. Taking rebar in East China as an example, the prices has dropped from about RMB4,400/t in the first quarter of 2023 to the current RMB3,700/t. The price trend in Malaysia is also similar, with the prices of rebar decreasing from MYR3,100/t at the beginning of 2023 to the current MYR2,750/t.

Asian Metal: How about the current demand from downstream industries in Malaysia?

Mr. Tan: Recently, the Malaysian construction steel market has been operating relatively slowly, with weak demand in downstream industries such as real estate, and there are few new construction projects. In addition, due to the decrease in market prices, most customers still prefer to purchase materials upon orders and refuse to build large stockpiles. Our monthly average sales have also decreased by about 10-20% compared to the previous months when the market performed well.

Asian Metal: What do you think of the construction steel market trend in Malaysia in Q2?

Mr. Tan: At present, the overall Malaysian construction steel market is still in a situation of oversupply. Therefore, if there is no significant improvement in demand from downstream industries in the short term, it is difficult for market prices to go up. In addition, the performance of steel markets in neighboring countries especially China is also relatively weak, which will bring certain downward pressure to the Malaysian market. Therefore, I believe that the domestic construction steel prices in Malaysia would go down further in the second quarter of this year, with an expected decrease of MYR50-100/t.

Asian Metal: What are your company's new development plans in the future?

Mr. Tan: As a central point of ASEAN, although Malaysia has a population of only over 30 million, ASEAN is a huge market with a total population of nearly 700 million. We just want to establish a foothold in Malaysia for the time being. Then I hope to expand my business to other ASEAN countries in the future. In addition, Malaysia's infrastructure, logistics, and some banking systems all support enterprises like us, and we hope to leverage these advantages to expand our business throughout ASEAN.