February 2022

NOTICEBOARD

THE STEELBILLETREBARSTEEL WIRE ROD

RM2,817

RM3,108

RM3,300SCRAP

IRON ORE

RM2,128

RM596

Trade Performance
Malaysia’s Iron and Steel Industry Trade Performance from January-February
2022
Malaysia’s Iron and Steel trade value in February 2022 was recorded at RM5.0 billion, grew by 24.2 percent
compared to RM4.0 billion in February 2021. Trade balance has improved from trade deficit of RM397.8
million in February 2021 to trade deficit of RM32.5 million in February 2022.
Malaysia’s export in February 2022 has expanded by 37.0 percent to RM2.5 billion from RM1.8 billion in
February 2021. Three main export destinations in February 2022 were seen to China, Korea and UnitedStates, represent 38, 12 and 11 percent of the total export value in the month, respectively.
Malaysia’s import in February 2022 grew by 13.7 percent to RM2.5 billion from RM2.2 billion in February
2021. Top three Malaysia’s import countries in February 2022 were China, Japan and Korea represent 16,
13 and 12 percent of the total import value in the month, respectively.
From January to February 2022, the trade value of the Iron and Steel products stood at RM11.1 billion in
2022 compared to RM8.1 billion in the same period of 2021, expanded by 36.8 percent. Trade balance has
narrowed from trade deficit of RM675.7 million in January to February 2021 to trade deficit of RM283.6
million during the same period of 2022.

Malaysia Trade Performance of Iron & Steel Industry
Feb 2022: RM5.0billion

Month Trade Value
24.2 % M-o-M change

Feb 2021: RM4.0billion

Feb 2022: RM32.5million
Trade Deficit

Month Balance ofTrade
91.8 % M-o-M change

Feb 2021: RM397.8million
Trade Deficit
Month Export
Feb 2022: RM2.5billion
37.0 % M-o-M change

Feb 2021: RM1.8billion

Month Import
Feb 2022: RM2.5billion

13.7 % M-o-M change

Feb 2021: RM2.2billion

YTD Trade Value
Jan-Feb 2022: RM11.1billion
36.8 % Y-o-Y change

Jan-Feb 2021: RM8.1billion

Jan-Feb 2022: (RM283.6illion)
Trade Deficit
Jan-Feb 2021: (RM675.7million)
Trade Deficit

YTD Balance of Trade
58.0 % Y-o-Y change[AUTHOR NAME]

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MSI WITH YOU
CHINESE NEW YEAR LUNCH HOSTED BY SENIOR MINISTER OF TRADE AND INDUSTRY
On the 28th of February 2022, The Ministry of International Trade and Industry hosted a Chinese New Year reception
lunch for the year 2022. In attendance was Dato’ Seri Azmin Bin Ali, Senior Minister of MITI, Senator Datuk Lim Ban
Hong, Deputy Minister of MITI, Ambassadors from various countries, representatives from various chambers ofcommerce and associations. The Senior Minister thanked everyone for attending in his speech which was followedby the Yee Sang tossing ceremony.

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DISCUSSION SESSION BETWEEN MATRADE AND MALAYSIA STEEL INSTITUTE
On the 11th of February 2022, MSI met up with officers from MATRADE to discuss potential offerings by MATRADE
that could be extended to MSI members and potential partnership between the two agencies. Based on meeting with
officials from MATRADE, iron and steel companies can reach out to MATRADE for business matching activities via
MSI.

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CHINESE NEW YEAR DINNER BY FMHMBA
On the 11th of February 2022, MSI represented by CEO Mr. Lim Keng Yow was invited for a Chinese New Year dinnerby The Federation of Malaysia Hardware, Machinery & Building Materials Dealers’ Association (FMHMBA) at theGrand Imperial Hotel in Kuala Lumpur.

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MSI TRURCEP AND CPTPP TRAINING FOR CSC STEEL
On the 24th of February 2022, MSI organized a training session on RCEP and CPTPP trade agreements for CSC SteelSdn Bhd. MSI conducted the training for around 24 employees of CSC Steel on the different aspects of the free trade
agreements and how it might affect the company going forwards.

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STEEL FACTS[AUTHOR NAME]

8EVENTS HIGHLIGHT[AUTHOR NAME]

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10STEEL NEWS
1. Local steel makers have no control over rising steel prices, say associations
Date: 15 February 2022
Source: https://www.theedgemarkets.com/article/local-steel-makers-have-no-control-over-rising-steelprices-say-associations
KUALA LUMPUR (Feb 15): Amid rising prices of building materials such as iron and steel, domestic steel bar
manufacturers have no control over the rising steel prices that result in higher building material costs, said
the Malaysian Iron and Steel Industry Federation (MISIF) and the Malaysia Steel Association (MSA) in a jointstatement. The two trade bodies noted that the domestic steel prices are subject to global supply anddemand dynamics. Both associations highlighted that steel bar users such as contractors and housingdevelopers have been able to import steel bars at zero import duties without the need for an approved
permit since 2008. "Steel bar prices rose in the first half of 2021, owing primarily to strong demand resulting
from global economic recovery and hike in raw material prices, particularly scrap, iron ore and coking coal,
due to supply tightness and global supply chain disruptions. "Coupled with the Chinese government's tightcontrol over steel production and the removal of export rebates, the increasing raw material costs arereflected in rising steel prices. "In addition, rising energy prices, such as a 64% increase in natural gas tariff
in 2021 in Malaysia, as well as a surge in international freight costs also contributed to the increase inimported material costs and steel prices," they said. The associations added that domestic steel bar prices
have constantly been below China prices. They reiterated that the trajectory of domestic steel prices tracks
the international price trend, particularly China steel prices, as the country accounts for more than half ofglobal crude steel production. MISIF and MSA also pointed out that they are not aware of any cartel
dominance in the iron and steel industry. According to both associations, steel products account for
approximately 3% of total housing project costs. "We welcome engagements with relevant ministries andassociations for further deliberation."[AUTHOR NAME]

112. Sabah MP calls for state govt to temporarily suspend export sales tax on scrap metals
Date: 20 February 2022
Source: https://www.malaymail.com/news/malaysia/2022/02/20/sabah-mp-calls-for-state-govt-totemporarily-suspend-export-sales-tax-on-sc/2042789
KOTA KINABALU, Feb 20 — The Sabah state government has been urged to temporarily suspend theexport sales tax on scrap metals. Effective February 1, 2022, the ban on the export of scrap metal outof Sabah has been lifted by the GRS Sabah government but in place, the government has instead
imposed a sales tax of RM200 per tonne of scrap metal to be exported out of Sabah effective the sameday. Kota Kinabalu member of parliament Chan Foong Hin said the export sales tax is rather hefty andexorbitant which is equivalent to a 15 per cent sales tax, far higher than 7.5 per cent Crude Palm Oil(CPO) state sales tax, and 5 per cent seafood export state sales tax. “No doubt, the Sabah government
would have the power to impose such export sales tax on scrap metal. The intention to impose such
scrap metal export sales tax could be a means to discourage the export of scrap metal out of Sabah,whilst increasing the state government’s coffers. “The State government hopes to see the effect would
be increasing of the supply or availability of scrap metal within Sabah. It could then encourage thedevelopment of downstream industries such as manufacturing, ironworks, blacksmiths, foundries,
steel mills, and others,” he said in a statement yesterday. According to Chan, most of the Sabah Scrap
Metals Recycle Association (SSMRA) members are currently facing cash flow problem and bankcommitments not only due to the Covid-19 pandemic, but also after eight months of export ban.
Furthermore, there are in fact only one ultimate purchaser of scrap metals in Sabah, Unimekar Sdn
Bhd. With only one ultimate buyer in the market, it is unable to consume the entire quantities of scrap
iron in Sabah, leading to a stockpile in most players’ yards which they are stuck with – even if they
were to export them out of Sabah, with the hefty export sales tax, they would still make near to no
profit. With Unimekar’s monopoly, they have no reason to offer a higher price to scrap metal sellers,
and this is clearly not healthy. What the Sabah government should do right now is to encourage theformation of more companies / factories with the ability to recycle scrap metals in Sabah. It would
create a more competitive market and economy. “Therefore, I call upon the suspension of theimposition of the export sales tax of RM200 per tonne of scrap metal to be exported out of Sabah
temporarily and to allow SSMRA’s members to recover their cash flow first. The GRS Sabah
Government must allow these industry players to survive first before talking about further
development of the downstream economy,” he said. Yesterday morning, Chan visited a scrap metal
yard in Kota Kinabalu under the invitation of SSMRA president Edwin Chen. He was shown stockpilesof scrap metals. There are some 40,000 tonnes of scrap metals stockpiling in the entire Sabah. —Borneo Post
3. Govt urged to intervene on steel price hike
Date: 21 February 2022
Source: https://themalaysianreserve.com/2022/02/21/govt-urged-to-intervene-on-steel-price-hike/
MASTER Builders Association Malaysia (MBAM) has called for government’s intervention on the issueof rising steel prices, which result in higher building material costs. Local steel bar manufacturers haverecently voiced out that they have no control over the rising steel prices, as it is subject to global supply
and demand dynamics. Commenting on the matter, MBAM president Tan Sri Sufri Mhd Zin said it isbest that government authorities such as the Ministry of International Trade and Industry and[AUTHOR NAME]

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Malaysian Competition Commission investigate and comment on the issue of rising steel prices. “Wewant stable prices for steel as there are no price fluctuation clauses in private contracts. “However,there are no further deliberations on this issue planned at the moment,” he told The Malaysian
Reserve. According to the Malaysian Iron and Steel Industry Federation (MISIF) and the Malaysia Steel
Association (MSA), steel bar prices rose in the first half of 2021 (1H21), owing primarily to strong
demand resulting from global economic recovery and hike in raw material prices, particularly scrap,
iron ore and coking coal, due to supply tightness and global supply chain disruption. The two tradebodies noted that coupled with the Chinese government’s tight control over steel production and theremoval of export rebates, the increasing raw material costs are reflected in rising steel prices. They
also added that rising energy prices, such as a 64% increase in natural gas tariff in 2021 in Malaysia, as
well as a surge in international freight costs also contributed to the increase in imported material costs
and steel prices. Notably, they said domestic steel bar prices have been consistently below China
prices. “We wish to reiterate that the trajectory of domestic steel prices tracks the international pricetrend, particularly China steel prices, as China accounts for more than half of global crude steel
production. “Hence, domestic steel bar manufacturers have no control over steel prices, given thatthe domestic steel prices are subject to the global supply and demand dynamics,” MISIF and MSA said
in a joint statement recently. Both associations also highlighted that steel bar users, such as
contractors and housing developers, have been able to import steel bars at zero import duty without
the need for an approved permit since 2008. Additionally, MISIF and MSA stated that steel products
account for approximately 3% only of the total housing project cost. They added that both associations
are not aware of any cartel dominance in the iron and steel industry. “We welcome engagements with
relevant ministries and associations for further deliberation,” they said. Meanwhile, the Institute for
Democracy and Economic Affairs (IDEAS) believes that the inflationary pressures and price hikes that
Malaysia is currently facing are temporary and can be effectively controlled through proper monetaryand fiscal policies. In a recent statement, IDEAS said even though the inflationary trend is
disconcerting, inflation can be controlled efficiently in the short to medium term through the timely
deployment of monetary policies. The think-tank noted that the US Federal Reserve has signalled that
it will increase its Overnight Policy Rate (OPR) multiple times this year to tame the US’ own inflation.
“Malaysia will likely follow suit by increasing its OPR gradually in 2022 and 2023, whereby Bank Negara
Malaysia is expected to increase the OPR by about 50 basis points in 2H22,” it said. According to IDEAS
director of economic and business unit and acting research director Dr Juita Mohamad, the current
rise in inflation is a global issue, stemming from stronger demand and higher energy prices, after two
years of battling the pandemic through the implementation of lockdowns. “The pandemic and the
lockdowns led to both demand and supply shocks at a global scale. As a small and open economy,
Malaysia is not immune to the devastating aftermath posed by the pandemic. “Inflationary pressure
is further compounded by the recent flooding in the country, which has put a strain on the supply of
selected essential goods produced locally,” she said. Juita added that to minimise the negative effectsof the price hikes on consumers in the short term, fiscal policies including fuel and electricity
consumption subsidies and price ceiling of essential goods have been deployed by the government in
the past. However, she noted that in the long term, these instruments and interventions need to berationalised in order to avoid sustained dependence on subsidies and price ceilings, which would not
be economically viable over the long term. “In our view, a formalised social safety net programmeneeds to be developed to ensure financial assistance and aid can be targeted and funnelled to thevulnerable households and groups effectively and transparently,” she said.

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4. Shares of metal-related manufacturers rise ahead of 4Q21 results
Date: 22 February 2022
Source: https://www.theedgemarkets.com/article/shares-metalrelated-manufacturers-rise-ahead4q21-results
KUALA LUMPUR (Feb 22): Shares of metal-related manufacturers were among top gainers on Bursa
Malaysia’s Tuesday (Feb 22) morning session, ahead of their 4Q2021 results filings, on improved
sentiment following strong showing by tin producer Malaysia Smelting Corp Bhd. Shares of aluminium
products manufacturer PMB Technology Bhd rose as much as 56 sen or 2.97% to RM19.44, before
paring gains to RM19.04 — still up 16 sen to lead the segment’s gainers, At the time of writing, sharesof Malaysia Smelting rose up 13 sen or 2.96% to RM4.53 to extend its record high. Steelmakers CSC
Steel Holdings Bhd (up 12 sen or 8.76% to RM1.49) and Ann Joo Resources Bhd (up 7 sen or 3.83% toRM1.90), were also among top gainers across Bursa Malaysia. Among big caps, Press Metal Aluminium
Holdings Bhd rose 5 sen or 0.75% to RM6.70. Steel-related manufacturers rose in anticipation ofhealthy results in the fourth quarter, tracking performance of peers and on the back of elevated prices
of metals and related commodities. On Monday (Feb 21), small-cap aluminium product manufacturer
Alcom Bhd and steel product manufacturer Tashin Holdings Bhd both posted record quarterly revenue
as well as their second best quarterly net profit since listing. Alcom booked in RM10.31 million net
profit in the fourth quarter ended Dec 31, 2021 (4QFY21) up 49.77% quarter-on-quarter, and as
revenue soared to a record high of RM183.32 million, up 40.8% from RM130.15 million in 3QFY21.
Tashin Holdings’ 4QFY21 net profit came in at RM15.95 million, down 23.38% from RM20.82 million
in 3QFY21. However, revenue rose 12.62% q-o-q to RM110.04 million, from RM97.71 million. Earlier
on Feb 18, Malaysia Smelting posted record quarterly net profit of RM64.07 million in 4QFY21, up
more than two-fold from RM28.94 million in 3QFY21. Revenue rose 16.74% q-o-q to RM255.06 million,
from RM218.48 million.
Outlook improves
In the steel industry, prices of iron ore and coking coal have rebounded by around 60% from its
November 2021 low. This year alone, the SGX TSI iron ore futures rose 14% at US$138.15/mt. In thesame period, The Dalian Commodity Exchange coking coal futures gained 16.8% at 2,583 yuan/mt.
Fitch Solutions on Feb 21 has sharply revised upwards its iron ore price forecasts for this year to
US$120/tonne from US$90/tonne previously. Its 2023 forecast was also revised to US$110/tonne,
from US$70/tonne. “While we expect iron ore prices to see some weakness in the coming days fromspot levels over the Chinese crackdown, we believe this will only be temporary,” Fitch Solutions said.
“In fact, we believe that prices will receive support from supply constraints and renewed Chinesedemand strength in 2022, such that the annual average iron ore price for 2022 and 2023 will remain
above pre-Covid-19 levels,” it said, pointing to renewed stimulus of the infrastructure sector in theworld’s second biggest economy to support economic growth.

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5. Masteel turns around in 2021 with RM32.5mil net profit
Date: 25 February 2022
Source: https://www.nst.com.my/business/2022/02/774747/masteel-turns-around-2021-rm325milnet-profit
KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) saw a firm turnaround in the financial year
ended December 31, 2021 (FY21), with a net profit of RM32.5 million from a net loss of RM14.73
million in FY20. The integrated steel manufacturer said this was buoyed by the recovery in selling
prices of steel products in local and international markets. Masteel said prices of iron ore, a primary
raw material for blast furnace-based steel making which is a bellwether for steel demand, rose from alow of US$85 per tonne in November 2021 to more than US$150 per tonne on February 11, 2022,
before settling at US$143 per tonne in the fourth week of February. At the same time, price of
metallurgical coal, which constitutes 40 per cent of blast furnace cost of production, remained highyear to date. Masteel's revenue during the period increased 14.2 per cent to RM1.58 billion from
RM1.38 billion. Masteel said the growth in revenue was bolstered by the Malaysian market where
sales rose 15.8 per cent to RM1.4 billion from RM1.3 billion previously on stronger demand from theconstruction sector. Export sales remained stable at RM136.1 million in FY21, versus RM137.3 million
a year ago. Masteel managing director and chief executive officer Datuk Sri Tai Hean Leng remained
upbeat on the company's prospects, particularly as the stronger demand for steel from the accelerated
pace of economic activities globally was expected to overshadow the impact of uptrending raw
material prices. He said the ongoing conflict in Eastern Europe was not expected to have any impact
on the company's earnings. "This strong turnaround, is made even more significant against the
backdrop of the disruptive Movement Control Orders in FY21, and showcases our resilience. "We arealso reaping the benefits of the timely upgrading of our steel making facilities. "Although prices of raw
materials are increasing, the greater force of external demand is widely expected to eclipse the highcost environment," he said. Tai added that North Asia's commencement of the civil construction
period in the spring, together with the lifting of restrictions of steel mill activities in China, wasprompting a strong rebound in domestic and international steel prices. "With our large capacity andreliable delivery network, we are confident of capturing this demand wave," he said. For the fourth
quarter, Masteel's net profit improved 46.6 per cent to RM12.04 million from RM8.21 million, while
revenue increased 24.4 per cent to RM463.87 million from RM372.76 million. Tai said the company
intended to maximise its new steel making facilities, which has substantial capacity to meet the
anticipated uplift in industry demand. "Overall, despite short-term volatilities such as the Omicronwave and labour shortage, Masteel is expected to continue delivering satisfactory performance in
FY22," he added.

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ABOUT MSI
Malaysia Steel Institute (MSI) is an industry driven enterprise supported and funded by the Ministry of International Trade &Industry (MITI) on shared responsibility basis with the industry. The main objectives of MSI are to promote and develop thecompetitiveness, resilience and sustainability of the Malaysian Iron and steel industry; to provide advisory services and to carryout commission or promote the study of scientific, technology and economic aspects of iron and steel industry development in
Malaysia; and to promote iron and steel product standardization and utilization within Malaysia. For more information, please
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