M A L A Y S I A N I R O N & S T E E L I N D U S T R Y F E D E R A T I O N
23 May 2017 2017 SEAISI Conference & Exhibition
Singapore
Presented by: Dato’ Soh Thian Lai (President)/
Frankie Wee (CEO)Malaysian Iron & Steel Industry Federation
Country Report – Malaysia
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Presentation Topics
The Malaysian Economy in 2016 and Outlook for 2017
Status and Updates of the Malaysian Iron & Steel Industry
Malaysian Iron & Steel Industry – Concerns, Challenges and
Way Forward
Outlook 2017
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The Malaysian Economy in 2016 and Outlook for 2017
KEY ECONOMIC INDICATORS 2014 2015 2016 p 2017f
Real GDP (% change) 6.0 5.0 4.2 4.3 - 4.8
Unemployment rate (as % labour force) 2.9 3.1 3.5 3.6 - 3.8
Inflation Rate (%) 3.2 2.1 2.1 3.0 - 4.0
External Trade (Annual Change %):Gross Exports Gross Imports
6.35.3
1.60.4
1.11.9
5.56.4
Current Account Balance (RM billion) 48.6 34.7 25.2 17.4
Movement of Ringgit (against USD) (%)(as at end-year)
-6.1 -18.6 -4.3 -
Interest rates (as at end-year):Overnight Policy Rate (OPR)Interbank Rates (1-month)
3.253.38
3.253.45
3.003.10
--
Source: Bank Negara Malaysia Note: P – Preliminary F- Forecast
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The Malaysian Economy in 2016 and Outlook for 2017
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Outlook for the Malaysian Economy in 2017
The Malaysian economy is projected to register asustained growth of 4.3% - 4.8% in 2017
Domestic demand continues to be the principaldriver of growth, underpinned by private sectoractivity
Malaysia’s external sector is expected to remainresilient despite continued uncertainties in theglobal environment. Both imports and exportsexpected to strengthen in 2017
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Outlook for the Malaysian Economy in 2017
All economic sectors are projected to registerpositive growth. The services and manufacturingsectors would be the key contributors to overallgrowth
Headline inflation projected to increase in 2017averaging between 3.0% – 4.0% reflecting primarilythe pass-through impact of the increase in global oilprices on domestic retail fuel prices
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Status and Updates on the Malaysian Iron and Steel Industry
RM 260 Billion of development expenditure underthe 11th Malaysia Plan (2016-2020) represents a16.0% increase from the previous plan
The Malaysian economy expected to grow by 4.3%– 4.8% in 2017 including 8.0% growth in theconstruction sector
New products and technologies including theIndustrial Building System (IBS) seem to be gainingsome traction in the market
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Status and Updates on the Malaysian Iron and Steel Industry
MIDA reported that there are currently 2,190projects in the iron and steel sector with totalemployment of 160,000 workers
Average annual growth rate from 2016 to 2018 isforecasted at 4%
ASC per capita forecasted to reach 326 kg in 2016(population of 31.7 million) and then growsfurther to 336 kg in 2017 and 345 kg in 2018
Malaysia’s steel demand is currently 4th largest inASEAN
M A L A Y S I A N I R O N & S T E E L I N D U S T R Y F E D E R A T I O N
Malaysia’s Steel Consumption (ASC)
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Note: E - Estimate
Long versus Flats Products
• Early estimate - Apparent Steel Consumption - estimated to increase by 3.4% from10.00 million mt in 2015 to 10.34 million mt in 2016
• Overall long products consumption (59.5%) is still higher than flats (40.5%)
8,491
6,645
8,314 8,238
8,922
10,049 10,079
10,001 10,339
-
(21.7)
25.1
(0.9)
8.3
12.6
0.3 (0.8)
3.4
(30.0)
(20.0)
(10.0)
-
10.0
20.0
30.0
-
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013 2014 2015 2016E(‘0
00
MT)
ASC ('000 tonnes) Growth %
49.5 46.5 43.3 43.9 34.6 35.4
40.5
50.5 53.5 56.7 56.1
65.4 64.659.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016E
Flat Long
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• In 2016, finished steel production recorded a negative growth of 2.4% to6.77 million mt from 6.93 million mt in 2015
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2008 2009 2010 2011 2012 2013 2014 2015 2016' E
6,251 5,690
7,231 7,494 7,385 7,490 7,478
6,931 6,768
‘00
0 M
T
Year
Finished Steel Products ('000 tonnes)
Production of Finished Steel Products
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Malaysia’s Production, Import, Export and Consumption of Selected Steel Products (‘000 MT), 2016
Note:
*(Not included - Cold Rolled Electrical Sheet)
**(Include - CGI, EGI, Tinplate, Zn-Al, Colour Coated & Other Metallic Coated)
Products Production (Estimate)
Import Export Consumption
Bars 2,879 793 105 3,567
Wire Rods 649 1,055 62 1,642
Sections 40 696 49 687
HR Sheets & Strips 77 2,015 31 2,061
Plates 220 351 45 526
CR Sheets & Strips* 892 1,244 271 1,865
Coated Sheets and Strips** 1,162 647 242 1,567
Pipes and Tubes 850 553 246 1,157
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Steel Import 2016
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China40%
Japan19%
Korea11%
Taiwan11%
India4%
ASEAN9%
Others 6%
Hot Rolled Sheets & Strips24%
Bars20%
Cold Rolled Sheets & Strips
15%
Wire Rods12%
Sections8%
Pipe & Tubes7%
Galvanised Sheet5%
Plates4%
Zn-Al, Coated & Others (2%)
Others 3%
Malaysia’s Steel Import by CountryMalaysia’s Steel Import by Products
• Malaysia imported 9.13 million mt, a surge of 15.3% from the previous year. Majorimported products are hot-rolled, bars and cold-rolled
• China remained the largest source of import for Malaysia with the total volume of3.67 million mt, increased 6.7% (2015: 30%)
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Steel Export 2016
ASEAN 41%
Korea14%
India8%
Japan4%
Taiwan3%
China 3%
Australia3%
Europe (EU25)3%
United States
2%Others
19%
Cold Rolled Sheets & Strips
25%
Pipe & Tubes23%
Galvanised Sheet11%
Bars10%
Plates6%
Wire Rods6%
Zn-Al, Coated & Others6%
Others13%
Malaysia’s Steel Export by Products Malaysia’s Steel Export by Country
• Export declined 2.7% from 2.3 million mt in 2015 to 2.2 million mt in 2016, 41%within ASEAN
• Major steel export products are cold-rolled, pipes & tubes and galvanized sheet
M A L A Y S I A N I R O N & S T E E L I N D U S T R Y F E D E R A T I O N
Malaysia’s import/export gap has moved strongly into deficit
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5,468
4,035
5,233 5,166
6,022
6,924
7,731 7,923
9,139
2,797 3,015
2,792
3,319 3,150
2,104
2,765 2,339
2,275
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
('00
0 M
T)
Import Export
Malaysia Imports and Export of Iron and Steel Products
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Excess capacity in China/Influx of imports/ Circumvention of Imports
Widening of Import-Export Gap
High Volatility in Prices
Under-Utilisation of Capacity/Shrinking Market Share
Growing capacities in ASEAN Countries
Industry Liberalisation (2020 and beyond)
Rising Costs of Doing Business
Concerns and Challenges for the Iron and Steel Industry
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Gloomy to Positive Outlook for the Local Steel Industry if . . .
China remains committed and steadfast in cutting its steel
output capacity and other proactive actions which will
prevent the dumping of cheap steel exports to Malaysia
Price normalization is sustained or further improved
Recovery in the local currency
Escalating cost of doing business (gas, electricity, foreign
workers and levies, etc.) is addressed and
Enforcement of the Government’s Policy on Procurement
of Locally Produced Products
M A L A Y S I A N I R O N & S T E E L I N D U S T R Y F E D E R A T I O N
Local Demand Outlook
Majority of steel products produced locally is destined for
infrastructure and construction sector applications. Hence,
the outlook for the steel industry depends much on the growth
and performance of this sector. The construction sector is
expected to maintain its robust performance with a targeted
double-digit growth rate of 10.3% and through new construction
works valued at RM138 billion in 2017.
The realization or implementation of projects (especially high
impact mega infrastructure and government social and
development projects) announced by the Federal Government
will undeniably boost the demand for steel products and generate
positive outlook for the local steel industry and multiplier effect on
the national economy when supported by the enforcement of the
Government’s Policy on Procurement of Locally Produced
Products.
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Malaysian Steel Industry - Way Forward
Buy-Malaysian-Products First Policy
Government’s continuous encouragement and
promotion of the Industrialised Building System (IBS)
Limit unfair imports through continuous regulatory
development and enforcement including by moving
rapidly to curtail/prevent import circumvention and
dumping of products into the country
“One-Belt-One-Road (OBOR)” – high demand for
infrastructure, construction materials, etc. Must benefit
the nation and industries
Mergers & Acquisitions (Vertical and horizontal)
/Consolidation/JVs
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M A L A Y S I A N I R O N & S T E E L I N D U S T R Y F E D E R A T I O N 20
Deals worth RM31 Bil signed
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Thank you