KUALA LUMPUR: Domestic steel players will continue to remain cautious due to stiff competition from cheaper markets and hope the government will address loopholes to enhance anti-dumping measures.
Sarawak-based Asteel Group founder and managing director Datuk Sri Victor Hii Lu Thian said there must be a stringent measure in regards to the imposition of duties on foreign imports into the country to enable competitive pricing for local steel players.
He said government intervention was needed as steel prices was dependent on the fluctuating prices of iron ore and global steel market.
"While we applaud the federal government's unwavering efforts to protect the domestic market and industry players from unfair trade practices, we hope they will look into enhancing these measures.
"We are also concerned about the possible repercussions due to the anti-dumping measure. If there is lack of supply due to the anti-dumping measures, there may be a possibility that this could also lead to a monopoly in supply, which in turn would lead to higher prices of the subject merchandise.
"As a result, this may adversely affect local players," he told the New Straits Times.
When ask if exiting measures really stop countries from dumping steel products in Malaysia, Hii said as long as the local steel players had the capacity and capability to meet the local demand, there would not be a monopoly in the steel industry.
He said existing anti-dumping duties provided a safety net to Malaysia but there was room for enhancement.
"We feel that there should be stricter surveillance on import by traders. The government should conduct audits to ensure that the documentation on clearance is in accordance with the actual cargo and ensure that they adhere and comply to all the relevant policies.
"In addition, as some of our steel manufacturers are small and medium enterprises (SMEs), the government can play a part to support local steel manufacturers by providing special incentives or subsidies. This will ensure that they are able to remain afloat, especially during this unprecedented time," Hii added.
He said similar to any steel player, Asteel Group had seen its cash flow and stock prices affected by the fluctuation of steel prices."
"We are doing our best to mitigate this by exploring other avenues to reduce costs to ensure that we provide affordable and quality products, at all times," Hii said.
Noting that steel was mainly used for the construction industry in Malaysia, he said domestic steel industry had seen a moderate decline in both long and flat steel demand.
This is due to the economic slowdown, exacerbated by the pandemic and the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO).
"However, we are hopeful that the consumption numbers will rise this year following the announcement of the government's stimulus measures such as Pelan Jana Semula Ekonomi Negara (Penjana) and Perlindungan Ekonomi dan Rakyat Malaysia (Permai), to help buoy the economy.
"For the steel market, any corresponding improvement will only be seen from the second half (2H) of 2021, depending on the situation of the pandemic, the MCO and CMCO," he said.
Asteel Group, a wholly-owned subsidiary of YKGI Holdings Bhd (YKGI), is involved in the manufacturing, trading and servicing of steel materials.
YGKI, listed on the main board of Bursa Malaysia, has presence in Sarawak, Sabah and overseas.
Despite market conditions, Asteel Group remains on a growth trajectory, recording a revenue of RM146 million for FY2020, a slight dip from RM164.6 million recorded in 2019.
Its pre-tax profit stood at RM2.2 million from RM5.82 million posted in 2019.
Asteel Group's order book stood at RM82 million as of December 31 2020 while tender book stood at RM235 million.
On projects outside Malaysia, Asteel Group secured its first roll on-site job through its partner Sarnatec Sdn Bhd last year, for the world's largest Ikea store, slated to open this year at Pasay City in Metro Manila in the Phillipines.
The company supplies blue claddings for the 65,000 square metres store.
The IKEA Blue BV-DEK cladding will cover 12,600 metre square of the store and a substantial portion will be painted with IKEA's corporate colour, yellow.
The project started end of December 2020 and Asteel Group is set to complete the installation process by end of the first quarter (Q1) of 2021.
Hii said the project in Manila was an important milestone for Asteel Group's penetration into the overseas market.
It plans to bid for projects in Kalimantan following the Indonesian government's plan to shift the nation's capital there.
Asteel Group is guided by a five-year masterplan that will catalyse the group into attaining its long-term sustainable growth and being a forerunner in the steel sector.
"As we move towards post-pandemic recovery, companies in the steel manufacturing industries are looking into innovative solutions to remain resilient.
"We foresee that many steel industries are facing the urgent need to explore new market opportunities outside the region as the pandemic has disrupted the industry's foundation structure which has prompted many to relook at what, where and how they do business."
Hii said it was important for companies to devise new business and operating models that are built on resilience and sustainability to future-proof themselves from future risks.
He noted that The Economic Outlook Report 2021 highlighted that the construction sector was projected to grow an estimated 13.9 per cent this year from an 18.7 per cent contraction in 2020, to be driven by the acceleration and revival of major infrastructure projects, as well as affordable housing projects.
"We hope with the revival of the local construction sector such as major infrastructures and housing projects, and the re-opening of economies after the lockdown, we will start seeing positive trends as all industries begin their recovery efforts," he said.
Source: https://www.nst.com.my/business/2021/02/662098/call-fix-anti-dumping-loopholes