Merger of iron, steel industry crucial, says MISIF

SHAH ALAM: The Malaysian iron and steel industry might need to be
consolidated in order to strengthen production capacity and tap the
Asean market, said the Malaysian Iron & Steel Industry Federation
(MISIF).
MISIF President Datuk Soh Thian Lai
said even Asean itself is still a net importer of steel and the Asean
six countries import about 42 million tonnes of steel a year.
Mergers
and acquisitions among steel players would result in bigger and
stronger players not only in Malaysia but also in the region as well,
he said at the federation's press conference on Friday.
"Our
iron and steel industry needs to consolidate through merger and
acquisition. That can make the steel plants more effective and
efficient, and this is important for growth," he said.
Even a big world player like Nippon Steel Corporation acquired Sumitomo Metal to strengthen its position as number two world steel producer, he said.
Furthermore,
he said, with the current world economy a bit slow and volatile, local
players need to be strong enough in the domestic market before being
able to compete abroad.
Southern Steel Bhd Group
Chief Operating Officer, Chow Chong Long, said in fact a lot of global
players including from Japan and China are looking at this region which
is still experiencing growth.
He said: "In Asean there is no Asean entity that is big enough to be able to tap into the Asean demand."
Soh
said there is a need for the industry to consolidate by becoming more
efficient and having lower overhead costs because it would be tough to
face the challenge from big players like China.
"China produces
two million tonnes of steel a day, China's production in five days is
equivalent to Malaysian steel production in a year. So this is a thing
we need to face because they are huge enough."
Soh said
consolidation among local steel players could be horizontal like
upstream and downstream companies, vertical among downstream companies,
or mergers between local companies and foreign companies.
It
would be more beneficial if the local players could get foreign
companies with technical expertise as their partners, he said.
Soh
also said the influx of under-specified and under-priced steel products
have affected the local long steel products and are severely affecting
the flat steel product players.
The government should discourage
the use of sub-standard and inconsistent grade products and promote
greater use of Made-in-Malaysia steel products wherever possible, he
said.
"This should be done through stringent enforcement of
policies on import duty exemption, custom import procedures and
adherence to quality standards throughout the whole value chain of
steel products," he said.
Soh also said electricity and gas are
very important for the upstream steel industry, and if the government
could provide competitive pricing, then the upstream sector could offer
competitive prices to the midstream and downstream industries, which
would also benefit consumers.
"We would like the government to
give more incentives like starting the off-peak electricity period
earlier like at 8pm instead of 10pm currently," he said.
The
government could also extend the off-peak period to weekends and public
holidays when most offices are closed, he added. - Bernama