We thank the Government for the policy review of the iron and steel industry by the Ministry of International Trade & Industry (MITI) dated 17 June 2009 which is a positive development for the local steel industry and in particular, the flat steel products sector namely hot rolled coils (HRC) and cold rolled coils (CRC) being produced by Megasteel Sdn Bhd, a member of the Lion Group.
The import duty review from 50% to 25% for all flat products and to be gradually reduced further will enable the industry to be streamlined and more competitive. Notably, this review will increase the consumption of locally produced CRC and thus benefit the cold rolled mills whose total capacity now far exceeds local consumption. As the cold rolled mills use the HRC from Megasteel as feedstock in their production process, this will also benefit Megasteel.
As announced by MITI, the policy review was formulated after discussion with the Malaysian Iron & Steel Industry Federation (MISIF) and augurs well for the entire Malaysian steel industry in providing a conducive environment for both upstream and downstream to work together to compete internationally and prevent foreign steel mills from dumping in Malaysia.
From the experience of major steel producing countries such as Japan, Korea and Taiwan, it is important to have close cooperation between the upstream and downstream industries. The upstream supports the downstream in fulfilling local demand as well as encouraging exports. Likewise, their downstream supports the upstream during difficult times to enable them to continue operation. Such close cooperation has led to the development of thriving downstream industries such as shipbuilding, car assembly, manufacturing of automotive parts, electronic and electrical components and other steel related industries in these countries.
While we support the liberalization of imports, we hope the Government will continue to encourage the use of locally produced goods as far as possible.
With the support for cold rolled production under the policy review, the local cold rolled mills including Megasteel’s cold rolled mill will have better capacity utilization. This will also help to boost Megasteel’s HRC plant whose current capacity utilization of about 45% will increase to 80% and with increased export orders, to 100% within a short period.
Thank you.
Released by:
Tan Sri William Cheng
Executive Chairman & CEO
Megasteel Sdn Bhd
18 June 2009
For further information, kindly contact Ms Quah Le Ching, Corporate Communications Senior Manager, at tel. no.: 21622155 ext 2505 or fax : 21618409.