July 2021

NOTICEBOARD

THE STEELBILLETREBARSTEEL WIRE ROD

RM2,731

RM3,250

RM3,214SCRAP

IRON ORE

RM2,123

RM921

TRADE PERFORMANCE
Malaysia’s Trade Performance January - July 2021
Malaysia’s Iron and Steel trade value in July 2021 was recorded at RM4.8 billion, increased by 19 percent
compared to RM4.0 billion in July 2020. Trade balance has widened from trade surplus of RM42.8 million in
July 2020 to trade deficit of RM746.6 million in July 2021.
Malaysia’s export in July 2021 decreased by 0.2 percent to RM2.02 billion from RM2.03 billion in July 2020.
Three main export destinations in July 2021 were seen to China, Korea and Thailand, represent about 40
percent, 12 percent and 9 percent of the total export value in the month respectively.
Malaysia’s import in July 2021 increased by 39 percent to RM2.8 billion from RM2.0 billion in July 2020. Top
three Malaysia’s import countries in July 2021 were China, Japan and Indonesia represent about 24 percent,
15 percent and 13 percent of the total import value in the month respectively.
From January to July 2021, the trade value of the Iron and Steel products stood at RM33.7 billion in 2021
compared to RM28.4 billion in the same period of 2020, expanded by 18 percent. Trade balance has widened
from trade deficit of RM1.2 billion in January to July 2020 to trade deficit of RM3.8 billion during the same
period of 2021.

Malaysia Trade Performance of Iron & Steel Industry
July 2021: RM4.8billion

Month Trade Value
19.0 % M-o-M change

July 2020: RM4.0billion

July 2021: (RM746.6million)
Trade Deficit

Month Balance of Trade1844.0 % M-o-M change

July 2020: RM42.8million
Trade Surplus

Month Export
July 2021: RM2.02billion

0.2 % M-o-M change

July 2020: RM2.03billion

Month Import
July 2021: RM2.8billion

39.0 % M-o-M change

July 2020: RM2.0billion

YTD Trade Value
Jan-July 2021: RM33.7billion
18.0 % Y-o-Y change

Jan-July 2020: RM28.4billion

Jan-July 2021: (RM3.8billion)
Trade Deficit

YTD Balance of Trade
230.0 % Y-o-Y change

Jan-July 2020: (RM1.2billion)
Trade Deficit[AUTHOR NAME]

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MSI WITH YOUENVIRONMENTAL QUALITY COUNCIL MEETING BY FMM
MSI had attended an environmental quality council (EQC) meeting organised by the Federation of Malaysian
Manufacturers (FMM) to discuss on the guidelines for the importation and inspection of metal scrap on
27/7/21. The meeting was attended by Department of Environment (DOE), Ministry of International Trade andIndustry (MITI), custom and major industry players (ferrous and non-ferrous metal). The meeting sought view
from the industry on the percentage of e-waste set in the guideline. Majority of the industry prefer to continue
with 0.3%, which is a practical limit compared to 0 % which is set in the new guidelines. In addition, the industry
also brought up the impact of this new guidelines for the genuine importer. The meeting took note of the
feedback from the industry and further discuss on the percentage set to be discussed among EQC based on
feedback from industry and doe’s studies in order to ensure the economy, environmental and social arebalanced. Industrial Development Division (BPI) of MITI had informed that a separate explanation on theprocess of importation based on the new guidelines to be conducted later.

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MSI BRIDGING GAPSTHE FOURTH NATIONAL INDUSTRIAL REVOLUTION (4IR) POLICY LAUNCHING CEREMONYThe Fourth National Industrial Revolution (4IR) Policy Launching Ceremony was successfully held on 1 July 2021
(Thursday), virtually. The ceremony was officiated by YB Dato' Sri Mustapa Mohamed, Minister in the Prime
Minister's Department (Economy) and YB Khairy Jamaluddin, Minister of Science, Technology and Innovation(MOSTI). The National Fourth Industrial Revolution (4IR) Policy (“National 4IR Policy”) is a comprehensive
national policy to drive concerted efforts in transforming the country's socio-economic development throughthe use of advanced 4IR technology.

PRESENTATION ON COVID-19 PUBLIC-PRIVATE PARTNERSHIP INDUSTRY IMMUNISATIONPROGRAM (PIKAS)
On 21 July 2021, MITI had organised a webinar briefing on Covid-19 Public-Private Partnership Industry
Immunisation Programme (PIKAS). MSI attended the session which was presented by Ms Vimala Murugan,
Deputy Senior Director, Industrial Development Division of Ministry of International Trade and Industry (MITI).
PIKAS was launched as Phase 4 of the National Covid-19 immunisation programme (PICK) to accelerate thevaccination of the Rakyat which is supported by the private sector. Vaccines are given free to the employees[AUTHOR NAME]

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by the government through on-site vaccination and PPV (vaccination centres). There are 2.23 million workers
in the manufacturing sector and MITI is targeting to have 90% of the workers vaccinated by September 2021.
The current focus states are Selangor, Johor and Penang.

NATIONAL POLICY ON GOOD REGULATORY PRACTICES (NPGRP) FORUM
On 30 July 2021, Malaysia Productivity Corporation (MPC) had organised a forum on National Policy on Good
Regulatory Practices (NPGRP) which was attended by MSI. The NPGRP forum was officiated by YBhg. Tan Sri
Dato’ Seri Mohd Zuki bin Ali, Chief Secretary to the Government of Malaysia. It provides a platform forpolicymakers, regulators and industry leaders to strengthen compliance with good regulatory practices (GRP)
for new and existing policies and regulations. The forum also to enhance understanding of the importance of
GRP in ensuring the production of quality policies and regulations.

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MSI TRUPERBINCANGAN BERKAITAN PENYELARASAN
INDUSTRI TIDAK BERPANDUKAN NOSS’MAKLUMAT

KURSUS

MODULAOn 6 July 2021, a discussion titled Perbincangan berkaitan penyelarasan maklumat kursus modula industri
tidak berpandukan NOSS was held via zoom meeting, which was also participated by MSI. The purpose ofthis discussion is to gather information on the skill training modulars not covered by NOSS that have been
implemented by the ILB or industry. With the information provided by the industry, JPK would look into thepossibility of certification for any modules that has been covered by the industry. A workshop will be
conducted in September 2021 whereby 3-4 members of industry will be invited pertaining to the above
discussion.

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6STEEL FACTS[AUTHOR NAME]

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EVENTS HIGHLIGHT[AUTHOR NAME]

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9STEEL NEWS1. Major Steel Mills in N. China Resume Operations with 70% Capacity, but Demand for Iron Ore to Wane
Date: 5 July 2021
Source: https://www.globaltimes.cn/page/202107/1227874.shtml
Furnaces in all major steel mills in Tangshan, North China's Hebei Province, the world's No.1 steel-producing citythat made about 14 percent of China's raw steel in 2020, are firing again, an industry report showed on Monday.
However, with the nation's continued pursuit of carbon emissions reductions, the furnaces are kept at 70 percent
of capacity, except for those that meetthe most stringent emissions standards.
Considering an uptick in steel productionin the first half of this year and thenation's goal of not increasing steel
output on an annual basis, industry
experts said that raw steel output is
expected to be slashed by some 60
million tons in the second half of 2021,
which would weigh on the demand forimported iron ore and iron ore prices.
Most steel mills in Tangshan haveresumed production at 70-percent
capacity, which they plan to maintain until the end of the year, according to a report by industry portal
mysteel.com, citing its field survey. The move is seen as a relaxation from a more stringent production curb
imposed earlier, which limited many steel mills to keeping their output at 50 percent, as the government balances
strong demand for steel from a recovering economy and its environmental commitment. The steelmaking sector
accounts for about 15 percent of China's emissions.

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Increased production capacity at the steel mills boosted iron ore prices on Monday. The most-traded September
iron ore contract on China's Dalian Commodity Exchange ended up 6 percent higher at 1,225 yuan ($189.6) a ton
during the day. Zheng Weiwei, a Shanghai-based steel trader, told the Global Times on Monday that steel futures
prices rose but spot prices remained flat, citing inelastic demand and the government crackdown on runaway steel
prices that threaten the profitability of manufacturer s.
However, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global
Times on Monday that steel mills will have to avoid producing about 60 million tons of crude steel in the second
half, so as to maintain a commitment of not increasing crude steel output from the 2020 level.
"The production curbs in Tangshan, which started in March this year, could slash crude steel production by 34
million tons a year, which means a reduction in demand for iron ore by 48 million tons," Wang said.
In the first five months, China's crude steel output reached 473 million tons, up 13.9 percent year-on-year. That
growth was in contrast with the stated Chinese government goal of not seeing an annual rise in crude steel
production for 2021. "Besides Tangshan in Hebei, other steel-producing provinces including East China's Anhui
and Shandong and Northwest China's Gansu are all facing output reduction targets. This will weigh on demandand prices for iron ore in the second half of 2021," Wang said. That could impact major exporters of iron ore to
China such as Australia, analysts said. Australia supplies about 60 percent of China's iron ore imports, so theprojected waning demand for iron ore does not bode well for the country, whose officials have been emboldened
to engage provocations against China by the commodity's surging prices and exports to China, analysts said.

2. Steel Sector in tight MCO Spot
Date: 12 July 2021
Source: https://www.thestar.com.my/business/business-news/2021/07/12/steel-sector-in-tight-mco-spot[AUTHOR NAME]

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PETALING JAYA: The RM45bil domestic steel sector has been severely impacted by the prolonged Covid-19 led
lockdowns with many players unable to operate and fulfill their outstanding orders, despite the current robust
export market. According to Malaysia Steel Association (MSA) president Tan Sri William Cheng, most steel
manufacturers are facing tremendous financial losses, especially those operating in Selangor and Kuala Lumpur,

the powerhouses of industries and services that contribute over 40% of the country’s gross domestic product(GDP). “Any extension of the enhanced movement control order (EMCO) will have dire consequences on almost
all the manufacturers and businesses,” he said. To add to the woes of steel manufacturers, previously, under thevarious MCOs where “warm idle” of machinery was allowed, under the current EMCO, “warm idle” is no longer
allowed. Cheng (pic below) told StarBiz that steel
manufacturers are worried about the damage totheir furnaces and equipment, which will add totheir hardship and already precarious financial
situation due to the various lockdowns since lastyear.
Therefore, during these trying times, MSA urges thegovernment to provide equal amounts of relief tothe larger corporations, similar to those in the small
and medium-sized enterprise (SME) segment.
As a fact, larger companies contribute about 61.1%
to the country’s annual GDP in comparison with the SME contribution of about 38.9%. MSA also urges thegovernment to allocate most of the vaccines available over the next 10 days or so to all workers in Selangor and
KL to deal with the surge in the outbreak.

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“In this regard, MSA would like to call upon the government to work closely with industry players to identify thelocations of infections in Selangor and Kuala Lumpur since the beginning of June. “The International
Trade and Industry Ministry (MITI) should also engage all associations and chambers in a Town Hall session topresent and clarify the origins of the various clusters since June 1 and data from the Hotspot Identification for
Dynamic Engagement (HIDE).
“In this way, MSA and other industry groups could assist the
government to identify and rationalise the need for the EMCO if
necessary, without sacrificing all the industries and businesses inthese states,” suggested Cheng, who is also Lion Group executive
chairman. Meanwhile, Malaysia Iron and Steel Industry Federation(Misif) president Datuk Lim Hong Thye (pic left) concurred that its
members were facing an extremely adverse financial impact from theseries of Covid-19-led lockdowns.

Currently, Misif members in the states under phase two of the National Recovery Plan (NRP) are allowed toresume operation at 60% workforce, while those in the states under the EMCO are not allowed to operate at all.
He said, “This situation has led to many of our members being forced to stay away from the export market
due to the inability to operate.
“We are also facing tremendous pressure from customers who are allowed to operate during phase one of the
NRP, such as the electrical and electronics (E&E) and infrastructure construction sectors, to continue supplying
steel materials, despite the fact that we are not allowed to operate.” Lim also cautioned that the lockdown
disruption would result in an adverse impact on the economy in terms of export revenue, both directly andindirectly as well as disruption in the construction sector.
Local steel exports contributed RM5bil in the first four months of this year, up 35% from the corresponding perioda year earlier. “While steel export is expected to be higher in May prior to the imposition of MCO 3.0, the inability
to supply (steel products) because of the EMCO lockdown has affected many export-related industries such as
E&E and others,” explained Lim, who is also Ann Joo Resources Bhd group managing director. The disruption in
the supply of steel products has affected the construction industry, which has the highest multiplier impact on the
country’s economy.
“Without the supply of steel products – the essential raw material – for the construction industry, all the activities
will not be able to proceed smoothly, ” Lim noted. Another important factor is that the current export market forsteel is still fairly robust especially due to the importation of steel from China. He said “As construction activities
are expected to continue picking up pace, coupled with other countries expecting to start pump-priming theireconomy after the Covid-19 pandemic, the export by our steel industry is expected[AUTHOR NAME]

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to be very strong. “However, local players can only benefit from the strong export demand if we are allowed tooperate, ” added Lim. It is worth noting that the United States is expected to start its US$1 trillion (RM4.19 trillion)
infrastructure spending later this year. Meanwhile, Malaysia Steel Institute (MSI) CEO Jarrod Lim opined that “thesteel industry players are currently digging deep into their pockets, especially for those who can still afford tomaintain it. However, if the EMCO prolongs, the industry will not be able sustain itself.”
He noted that iron and steel are critical materials for the construction and industrial sub-sectors such as E&E,
automotive, steel fabrication, food and beverage, machinery and equipment and furniture. He also described “notbeing able to operate” as the major challenge for steel players as the industry is a highly-capitalised investment,
which employs over 90, 000 people.
In a nutshell, most industry players will not be able to fulfil export and local commitments, will face high repayment
interests and high operational costs while in maintenance mode, and the shelf life of products may deteriorate
due to rust build-up following the continuous lockdowns, Lim pointed out. MSI, which is an agency under MITI,
estimates the steel sector performance in 2021 to be similar to 2020.
The export of local iron and steel rose to 10.03 million tonnes in 2020 from 6.64 million tonnes in 2019, while
imports fell to 5.98 million tonnes for the period under review from 7.51 million tonnes a year earlier. In terms ofregional competitiveness, he said Malaysia last year despite the Covid-19 pandemic, was recorded as the secondbiggest exporter of finished steel in the Asean region behind Vietnam, and ahead of Indonesia and Thailand.
3. Iron ore price craters on Chinese steel output cuts
Date: 30 July 2021
Source: https://www.mining.com/iron-ore-price-tumbles-on-gloomy-china-demand-outlook/
Iron ore prices tumbled on Friday, collapsing under the weight of China’s resolve to reduce steel output in linewith its decarbonization drive, and slowing domestic demand for the construction and manufacturing material.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for$181.57 a tonne, down 7.6% from Thursday’s closing, the lowest since April. Iron ore on China’s Dalian Commodity
Exchange closed daytime trading 8.1% lower at 1,027 yuan ($158.95) a tonne, with its monthly loss of nearly 8%
the steepest since February 2020. Spot iron ore traded below $200 a tonne on Thursday for the first time since
May 28, SteelHome consultancy data showed.
“Prices fell as iron ore demand weakens in the face of policy to reduce China’s steel output as a means to cut
emissions,” Commonwealth Bank of Australia commodities analyst Vivek Dhar said in a note.

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BEIJING’S ATTEMPTS TO CAP STEEL OUTPUT BELOW LAST YEAR’S RECORD HAVEN’T PROVED SUCCESSFULSO FAR, WITH PRODUCTION CLIMBING 12% IN THE FIRST HALF FROM A YEAR EARLIER
China has asked mills to limit this year’s output to no more than the 2020 volume after the first-half production
grew nearly 12% compared with a year earlier. Shagang Group, the world’s fourth-largest steel mill, said this weekthat it’s curtailing production and overseas sales to comply with government efforts to cut emissions.
Beijing’s attempts to cap steel output below last year’s record haven’t proved successful so far, with production
climbing 12% in the first half from a year earlier. That is raising expectations that activity will need to be restrictedsignificantly through the end of the year. At the same time, China has unveiled more measures to curb overseas
shipments, with the aim of using lower exports and inventories to offset supply shortfalls.
China’s steel curbs are weakening demand for iron ore, Vivek Dhar, commodities analyst at Commonwealth Bank
of Australia, said in a note. “Keeping production flat this year implies a 12% year-on-year contraction in secondhalf output. We don’t expect China’s crude steel output to contract to that extent, but China’s steel production is
now facing more headwinds than slowing steel demand.”[AUTHOR NAME]

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Investors are also assessing signs of weaker demand from the property sector, according to Australia & New
Zealand Banking Group. China urged five cities to stabilize their local markets after residential housing prices rose
too fast in the first half, the People’s Daily reported.

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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 standardisation and utilisation within Malaysia. For more information, please
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