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Malaysia Metals Report Q4 2009Published by: Business Monitor International Published: Sep. 9, 2009 - 44 Pages Table of Contents
AbstractWhile the outlook for the Malaysian steel industry was poor in 2009, tentative signs of recovery indemand in Q2 have created a sense of optimism and BMI’s latest Malaysia Metals Report forecasts astrong recovery from 2010 as state-financed infrastructural projects begin to have a positive impact on theindustry.In H109, many steel plants were running at 35-50% of nameplate capacity, according to the MalaysianIron and Steel Industry Federation. Nevertheless, steelmakers reported that demand for steel bar pickedup in Q2, boosted by the government’s first MYR7bn stimulus package which had by August beenmostly disbursed. However, statistical sources showed that the situation was far from good. In June 2009,Malaysia’s manufacturing sales fell 25.5% y-o-y, led by a large fall in the iron and steel sector. Thisfollowed a similar decline in the previous month. The Ninth Malaysia Plan is likely to have a positive impact on demand in H209, particularly followingthe awarding of the contract for the Penang bridge project. The construction sector is vital to the recoveryof the Malaysian steel market as it represents 71% of the country’s steel consumption. Longs prices wereexpected to rise over H209 as steel mills track the rising international market, although in Q209 they werestill much lower than the MYR2,850-3,000 per tonne recorded in October. There is still a great deal ofuncertainty in the domestic longs market, with producers warning that an increase in sales could beattributed to restocking to avoid the cost of future price rises rather than an increase in actual demand. Despite the signs that the domestic longs market may have passed its low point, BMI believes that for2009 as a whole Malaysian demand will be well down on 2008. Sales are still likely to be down by 19%by the year-end, with major infrastructural projects likely to take time to plan and implement, withfinished steel consumption falling to 8.64mn tonnes, crude output down 24% to 5.15mn tonnes and hotrolled production down 27% to 4.17mn tonnes. BMI believes that the Malaysian steel industry will rebound strongly in 2010 and by 2013 should havereached or exceeded pre-recession levels. Over the medium-term, the industry’s development will bedetermined by trade liberalisation, with the move towards the reduction of duties on imported flatproducts from August 1, 2009. This should improve the competitiveness of cold rolled mills, whosecapacity far exceeds domestic consumption and are therefore reliant on export markets for growth. Whiledomestic flats producers have voiced concerns over the measures, their anxieties should be allayed by thegovernment’s pledge to enforce rigorous quality standards on both imports and domestically producedsteel products to prevent the market from being flooded with substandard material. Get Full Details About This Report >> |
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