"... With the objectives to enhance competitiveness of the local
industry, as well as encourage the manufacture of more competitive
products for international market, the Government has agreed to
implement the following measures, effective from 1 August 2009. The
policy measures for iron and steel industry are formulated after a
series of discussions held with the Malaysian Iron and Steel Industry
Federation (MISIF) since early 2007.
These measures covers:
i) Manufacturing Licences
ii) Import and Export Licences (AP)
iii) Import Duty & Import Duty Exemption
iv) Determination of HRC base price
v) Implementation of Mandatory Standards
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"The Government’s decision to abolish certain import restrictions
within the steel industry will allow finished steel product makers to
competitively source their raw material needs.
The latest move
by the Government, viewed as a step towards full liberalisation of the
industry, was designed to “enhance competitiveness” of the local steel
players.
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AmResearch analyst Mak Hoy Ken said the latest liberalisation could be
a pre-emptive move by the government to commoditise local steel prices.
"There are increasing expectations of a shortage of steel bars once the
rollout of the Ninth Malaysia Plan projects get underway," he said.
Some millers like Ann Joo are already ramping up capacity ahead of an
unexpected uptick in domestic steel consumption by the first quarter of
2010, Mak added.
"Our channel checks with local contractors
revealed that prices of local steel bars could rise by another RM300
per tonne over the next three months."
As for the flat steel
players, the positive impact from import duty exemptions on its main
feedstock could be offset by intensifying competition with the gradual
removal of import duties for flat steel products. The impact is more
pronounced on the smaller steel players, where barriers to entry are
already low, Mak said.
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