Malaysian steel associations oppose new capacity in Sarawak
2020-02-06 09:00:33 [Print]
The Malaysian Iron and Steel Industry Federation (MISIF) and Malaysia Steel Association (MSA) opposed the proposed new investment from Wenan steel project at Samalaju Industrial Park (SIP) in Bintulu, Sarawak, within the Sarawak Corridor of Renewable Energy.
In a statement the two associations stated that the proposed 10 million tonnes (MT) per annum steel project would cause overcapacity and steel glut in the industry.
The associations also stated that the country's total steel consumption in 2018 stood at 9.77MT, but the total installed capacity was 24.64MT -- with 12.64MT and 12MT for long and flat steels respectively.
"Thrice the size of the newly built steel mill in the east coast of West Malaysia and bigger than the total steel consumption of 9.77MT, the proposed 10MT per annum similar production capacity from Wenan will result in the further oversupply within the domestic industry, thus causing severe misallocation of resources and irreversible damage to the Malaysian steel industry," they said in the statement.
The steel associations said foreign direct investment and domestic direct investment should be made in steel grades and products that are not made locally, such as railway tracks, seamless pipes, hot-rolled sheet piles and electrical steel sheets which will likely move up the supply value chain. Thus, manufacturing licenses for products which are being produced by existing local steel mills should not be approved, said MISIF and MSA.
The groups also said domestic scrap supply was 2.96MT in 2018 with the shortfall of 558,000MT met by imports. They added that if Wenan were to produce the 10MT steel products with conventional scrap consumption of 20%, up to two million tonnes of scrap metal would be required, which accounted for 67.6% of domestic scrap supply in 2018.
"Scrap demand of existing steel millers can only be met via imports and this will lead to foreign exchange loss, trade deficit and outflow due to service costs, and freight and insurance charges," said the groups.
In a statement the two associations stated that the proposed 10 million tonnes (MT) per annum steel project would cause overcapacity and steel glut in the industry.
The associations also stated that the country's total steel consumption in 2018 stood at 9.77MT, but the total installed capacity was 24.64MT -- with 12.64MT and 12MT for long and flat steels respectively.
"Thrice the size of the newly built steel mill in the east coast of West Malaysia and bigger than the total steel consumption of 9.77MT, the proposed 10MT per annum similar production capacity from Wenan will result in the further oversupply within the domestic industry, thus causing severe misallocation of resources and irreversible damage to the Malaysian steel industry," they said in the statement.
The steel associations said foreign direct investment and domestic direct investment should be made in steel grades and products that are not made locally, such as railway tracks, seamless pipes, hot-rolled sheet piles and electrical steel sheets which will likely move up the supply value chain. Thus, manufacturing licenses for products which are being produced by existing local steel mills should not be approved, said MISIF and MSA.
The groups also said domestic scrap supply was 2.96MT in 2018 with the shortfall of 558,000MT met by imports. They added that if Wenan were to produce the 10MT steel products with conventional scrap consumption of 20%, up to two million tonnes of scrap metal would be required, which accounted for 67.6% of domestic scrap supply in 2018.
"Scrap demand of existing steel millers can only be met via imports and this will lead to foreign exchange loss, trade deficit and outflow due to service costs, and freight and insurance charges," said the groups.
