KUALA LUMPUR: Malaysia's steel exports, which typically range from several hundred thousand to a million metric tonnes annually, are facing an uncertain outlook following new US trade measures.
However, industry experts believe the situation is not entirely grim, as there are opportunities to be seized.
Stephen Innes, managing partner at SPI Asset Management, noted that the entire steel value chain—from raw material suppliers to manufacturers dependent on steel components—will need to adapt to a new pricing landscape.
Despite these challenges, Innes highlighted that Malaysian exporters have viable alternatives to mitigate the impact.
Southeast Asian markets like Indonesia, Vietnam, and Thailand, where rapid industrialisation and infrastructure development are driving strong demand for steel products, offer promising opportunities, he told Business Times.
He also pointed to emerging economies in South Asia, the Middle East, and Africa, where the construction and manufacturing sectors are expanding, as potential new growth markets for Malaysian steel and aluminium exports.
On Sunday, US President Donald Trump announced plans to impose formal tariffs on steel and aluminium imports, alongside reciprocal tariffs on countries that levy duties on US goods.
Innes said the new tariffs would immediately make Malaysian steel more expensive for US buyers, potentially reducing demand and forcing exporters to explore alternative markets.
"The new tariff on steel imports is set to send ripples through global markets, and Malaysia's steel sector is no exception. While the country isn't among the biggest steel exporters to the US, the impact could still be substantial, with potential disruptions stretching far beyond direct shipments," he told Business Times.
He noted that the effects would go beyond lost sales, as profit margins would tighten, particularly for upstream steelmakers reliant on economies of scale.
"But it does not stop there. Downstream industries that depend on steel inputs, from construction to automotive manufacturing, could also feel the pinch as prices shift and supply chains recalibrate," he added.
Innes said trade agreements like the ASEAN Free Trade Area and the Regional Comprehensive Economic Partnership provide Malaysian exporters with smoother access to these alternative markets.
"By leveraging these agreements, exporters can diversify their customer base, reducing dependence on the US market and insulating themselves from future geopolitical trade disruptions.
"The ability to pivot toward emerging demand hubs will determine how well Malaysia weathers this storm," he added.
Innes noted that Malaysia has faced US tariffs before, and the industry has continually adapted to past protectionist measures.
However, he said that given the evolving global trade landscape and the added pressure of a broader US tariff agenda, the road ahead could be rockier than before.
"The question now is whether Malaysia's steel industry can adjust fast enough to offset these challenges or if these tariffs will force significant restructuring across the sector.
"For now, all eyes will be on how Malaysia's steel industry navigates the storm, whether through trade diversification, supply chain shifts, or policy responses. But one thing is clear. When the US sneezes, global markets brace for impact, and Malaysia's steel sector is now firmly in the crosshairs," Innes said.
Despite the potential impact, Sabah-based steel products manufacturer Colform Group Bhd and Pantech Global Bhd downplayed concerns, stating that the new tariffs are unlikely to affect their operations.
Colform Group managing director Kang Ket Hung noted that the company does not export its products to the US.
"For the time being, we do not export anything into the US. I do not think this will affect us in any way," he said after the company's ACE Market debut on Bursa Malaysia on Monday.
Meanwhile, Pantech Group managing director Adrian Tan said the proposed 25 per cent tariff on steel and aluminium imports would apply uniformly to all countries, creating a level playing field.
"If every country is at 25 per cent, all things will be equal, and it will make no difference to us," Tan said after the company's prospectus launch.
Tan added that such tariffs typically target upstream steel and aluminium producers.
In contrast, Pantech operates primarily in the downstream sector, serving customers in the US, Malaysia, Taiwan, Indonesia, Canada, and Europe.
Source: https://www.nst.com.my/business/economy/2025/02/1173797/malaysias-steel-exports-face-uncertainty-amid-us-trade-measures