Malaysian carbon steel market faces import pressure, solid growth in local demand

Recently, Malaysia’s carbon steel market has shown a double increase in supply and demand, but the continued influx of imported steel has put competitive pressure on local steel mills. With the demand for construction, infrastructure and manufacturing picking up, the market expects carbon steel consumption to grow by 5%-8% year-on-year in 2024, but the price trend is still subject to international market and policy influences.

1. Demand side: infrastructure and manufacturing industry to promote consumption growth

The Malaysian government continues to promote large-scale infrastructure projects, including the East Coast Railway (ECRL), Penang Light Rail Transit (LRT) and the construction of data centers, driven by the demand for steel for construction. In addition, electronics, automotive and machinery manufacturing recovery also supported the demand for cold rolled, galvanized sheet and other high-end carbon steel products.

Malaysian Iron and Steel Institute (MISIF) data show that the apparent consumption of carbon steel in the first quarter of 2024 increased by 6.2% year-on-year, of which hot rolled coil (HRC) and rebar demand is the most robust.

2. Supply Side: Imported Steel Hits Local Market

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Despite demand growth, low-priced imported steel (mainly from China, Vietnam and India) continues to enter the Malaysian market, leading to pressure on the margins of local steel mills. 2024 January-April, Malaysia’s carbon steel imports grew 12% year-on-year, with China’s HRC accounting for more than 40% of the total.

In order to cope with the competition, Malaysia’s largest steel maker Union Steel (Alliance Steel) adjusted its production strategy to increase the proportion of high value-added products, while calling on the government to strengthen trade protection measures. At present, Malaysia’s part of the implementation of anti-dumping duties on imported steel, but the industry believes that the strength still needs to be increased.

3. Price Trend: International Quotes and Cost Support

Due to high iron ore and coke prices, global carbon steel production costs remain high. Malaysia’s local HRC offer remained at 2400-2500 ringgit / ton (about 510-530 U.S. dollars), but the price of imported resources is generally lower than 5% -8%, squeezing the profit margin of local enterprises.

Market participants expect that if Chinese steel mills continue to increase exports in the second half of the year, Malaysian carbon steel prices may come under further pressure. However, if the government introduces stricter import restrictions or infrastructure investment accelerates, local steel prices are expected to be supported.

4. Policy and industry developments

– Trade policy: Malaysia’s Ministry of International Trade and Industry (MITI) is considering expanding the scope of anti-dumping investigations of imported steel, which may involve galvanized sheet and cold rolled coil;

– Green transformation: some steelmakers have started to explore low-carbon steelmaking technologies, such as the electric furnace short-flow process, in line with the global trend of carbon reduction;

– Regional cooperation: Malaysia and Indonesia are exploring ways to strengthen ASEAN steel industry synergies and reduce dependence on imported resources.