October 2021

NOTICEBOARD

THE STEELBILLETREBARSTEEL WIRE ROD

RM2,863

RM3,213

RM3,288

SCRAP

IRON ORE

RM1,994

RM504

TRADE PERFORMANCE
Malaysia’s Trade Performance from January-October 2021
Malaysia’s Iron and Steel trade value in October 2021 was recorded at RM5.7 billion. It grew by 46.2 percent
compared to RM3.9 billion in October 2020. Trade balance has improved from trade deficit of RM212.9 millionin October 2020 to trade deficit of RM89.7 million in October 2021.
Malaysia’s export in October 2021 has expanded by 47.4 percent to RM2.8 billion from RM1.9 billion in October
2020. Three main export destinations in October 2021 were seen to China, Thailand and Indonesia which
represent 55 percent, 6 percent and 5 percent of the total export value in the month respectively.
Malaysia’s import in October 2021 grew by 38.1 percent to RM2.9 billion from RM2.1 billion in October 2020.
Malaysia’s top three import countries in October 2021 were China, Japan and Taiwan. China and Japan
represent 16 percent respectively while Taiwan represent 15 percent of the total import value in the month.
From January to October 2021, the trade value of the Iron and Steel products stood at RM50.0 billion in 2021
compared to RM40.0 billion in the same period of 2020, an increase by 25 percent. Trade balance has widened
from trade deficit of RM902.5 million in January to October 2020 to trade deficit of RM3.6 billion during thesame period of 2021.

Malaysia Trade Performance of Iron & Steel Industry
Oct 2021: RM5.7billion

Month Trade Value
46.2 % M-o-M change

Oct 2020: RM3.9billion

Oct 2021: RM89.7million
Trade Surplus

Month Balance ofTrade
57.9 % M-o-M change

Oct 2020: RM212.9million
Trade Surplus
Month Export
Oct 2021: RM2.8billion
47.4 % M-o-M change

Oct 2020: RM1.9billion

Month ImportOct 2021: RM2.9billion

38.1 % M-o-M change

Oct 2020: RM2.1billion

YTD Trade Value
Jan-Oct 2021: RM50.0billion
25.0 % Y-o-Y change

Jan-Oct 2020: RM40.0billion

Jan-Oct 2021: (RM3.6billion)
Trade Deficit
Jan-Oct 2021: (RM902.5million)
Trade Deficit

YTD Balance of Trade298.9 % Y-o-Y change[AUTHOR NAME]

2

MSI WITH YOU
MEMORANDUM OF AGREEMENT CEREMONY BETWEEN SIRIM QAS INTERNATIONAL AND
MALAYSIA STEEL INSTITUTE
On 7 October 2021, SIRIM QAS and MSI had a collaborative agreement session. The Memorandum of Agreement(MOA) is the beginning for a greater collaboration in the future for mutual benefits between both agencies
under MITI and at the same time to bring benefits to the iron & steel industry. This synergy was created through
SIRIM QAS’s technical capability and strength and MSI’s industry knowledge on iron and steel.

[AUTHOR NAME]

3WEBINAR ON IR4.0 STEEL AND BIM ADOPTION IN THE CONSTRUCTION INDUSTRY
28 October 2021, Malaysia Steel Institute (MSI) in collaboration with BIMAGE Consulting along with Master
Builders Association Malaysia, CIDB Malaysia, Autodesk and myBIM had organized a successful webinar on IR
4.0 Steel and BIM adoption in Construction Industry. The webinar was officiated by Datuk Hanafi Sakri, theSenior Director of Industry Development from the Ministry of International Trade and Industry (MITI) and MSICEO, Mr. Lim Keng Yow.
Also present at the webinar were representatives from the organizers such as Ir. Quah Beng Teong from Master
Builders Association Malaysia who was also the moderator for the day, Sr. Mohd Zaid Zakaria from CIDB
Malaysia, Mr. Matthew Dewees from Autodesk, Mr. Ajith Menon from BIMAGE Consulting and Mr. Zafri
Nasrullah Mohamed Ali from myBIM Center, Malaysia who were all speakers at the webinar.

[AUTHOR NAME]

4

MSI BRIDGING GAPLAB WEBINAR - NATIONAL INVESTMENT ASPIRATIONS
On 21 October 2021, MSI participated in the two-day National Investment Aspirations (NIA) Lab from 11-12
October 2021 through webinar. The first day involved the Government Departments and agencies and thesecond day involved the private sector. KSU MITI flagged off the Lab by presenting the opening statement andon the second day by the Deputy Secretary General (Investments) MITI. Speakers were then provided thebackground of the NIA, global perspective on investments including context setting and megatrends on global
investment landscape.

On each day there were two breakout sessions, where interaction among participants was facilitated by BCG
to obtain ideas and feedback based on prepared template by BCG. The outcomes of the discussions were thencaptured to be used as the basis to build on for the next steps. The Deputy Secretary General (Investments)
MITI, made the closing remarks for both the two days.

[AUTHOR NAME]

5The National Investment Aspirations is premised on five pillars which includes to increase economic complexity,
create high-value jobs, extend domestic linkages, develop new and existing clusters.
The National Investment Aspirations is premised on five (5) pillars:1.

Increase economic complexity;

2.

Create high-value jobs;

3.

Extend domestic linkages;

4.

Develop new and existing clusters; and5.

Increase inclusivity.

Objectives of the first day were:•

Introduce National Investment Aspirations and to embark on New Investment Policy
Development;•

Create clarity on success measures and target outcomes for NIA; and•Identify key challenges across Malaysia’s investment landscape.

Objectives of the second day were:•

Introduce National Investment Aspirations and to embark on New Investment Policy
Development;•

Identify key challenges across Malaysia’s investment landscape; and•Discuss potential reforms required to address key investor challenges and in achieving national
goals.

[AUTHOR NAME]

6

Feedback
The Lab based on public/private sector discussions among others, identified especially by the private sector
that national investment policy needs clear vision; need for Environment, Social and Governance (ESG)
guidelines/roadmap; need for the streamlining of Investment Promotion Agencies (IPAs) – to avoid confusion
among investors; need for end–to end hand holding and post investment approved support and care; need toprovide total ecosystem for investments and not limited to just financial incentives including high skilledworkforce and its development. Following this, the Lab also discussed possible reforms.
Next Steps•

To hold High-Level Investment Lab 2 (sector specific);•

To come up with final report by Q1 next year.

[AUTHOR NAME]

7

MSI TRU
BRIEFING SESSION WITH THE FOURTH BATCH OF PARTICIPANTS FOR PENJANA TRAINING
PROGRAMME
On 12 October 2021, MSI held a briefing session with the fourth batch of participants for the PENJANA training
Programme. The fourth batch for PENJANA programme was attended by 16 from 20 participants. The participants started
the 10-days training on 13 October 2021.

[AUTHOR NAME]

8

BRIEFING SESSION WITH THE FIRST BATCH OF PARTICIPANTS FOR RMK-12 TRAINING
PROGRAMME
On 29 October 2021, MSI held a briefing session with the first batch of participants for RMK-12 training
Programme. The briefing was attended by 23 participants. The participants started the 20-days training on 1
November 2021.

[AUTHOR NAME]

9STEEL FACTS[AUTHOR NAME]

10EVENTS HIGHLIGHT[AUTHOR NAME]

11

[AUTHOR NAME]

12STEEL NEWS
1. Iron ore’s 50% surge is latest spike to fuel inflation fears | The Star (11 October 2021)(Bloomberg) -- Iron ore has suddenly gone from commodity laggard to a top performer, withresurgent prices further fanning inflation fears that are rippling across the world.
Futures have climbed 50% in just three weeks, joining gains in aluminum to energy as rising demand,stalled supply lines and climate policy send an index of raw materials to the highest ever. Surging
iron ore prices are likely to crimp margins at steel mills, which may be unable to pass on the higher
costs to downstream sectors like property and construction that are cooling.
The widespread commodities rally, as well as an increasingly severe and costly power shortage, isalready rattling carmakers to supermarket shoppers. It also complicates the outlook for global policy
makers, who are seeking to balance the withdrawal of emergency stimulus measures with concernsthat growth may be slowing and stubbornly high prices.
Front and center for investors now is an energy crisis stretching from Asia to Europe, that’s shutting
factories, boosting power bills and threatening to detail the global recovery from the pandemic.
China said it will allow power prices to rise by double the current limit and costs for the most-energy
intensive industries -- which includes metals producers -- won’t be subject to a cap.
The country’s power shortage is likely to persist into winter and lead China into a short period of
stagflation, with elevated producer-price inflation and growth pressures, Citigroup Inc. analysts,
including Tracy Liao, wrote in a report. "China may also export inflation as the disruptions ripple
through global supply chains.”
Iron ore has climbed 16% this month on expectations some Chinese steelmakers will resume
operations after achieving deeper-than-expected production cuts. The market has been whipsawed
this year as China’s pledge to cap annual steel volumes played out: prices spiked to a record in May
as mills front-loaded output, then tumbled through September as authorities stepped up measures
to curtail supply and fears about the property market weighed on demand.
"Steel output is reportedly set to increase in October in some parts of China, like Tangshan, Jiangsu,
Zhejiang and Anhui, after these regions exceeded steel production cuts in September,” Vivek Dhar,
commodities analyst at Commonwealth Bank of Australia, wrote in a note. "The impacted mills may
see November output either match or exceed October levels.”[AUTHOR NAME]

13

Iron ore in Singapore gained 10% to $137.60 a ton, while futures in Dalian closed 4.6% higher. In
other markets, Chinese thermal and coking coal futures rose to a record on Monday as heavy rain
and flooding expand mine shutdowns in the country.
The higher power prices come as the global shipping industry already faces supply line turmoil and,along with rallying commodity prices, is expected to push China’s factory inflation 10.5% higher in
September, the steepest monthly increase since 1995, according to a Bloomberg survey of
economists ahead of official data on Thursday.
Citigroup said there’s further upside for fuel prices as colder weather approaches, while metal andsteel prices may stop rising given a looming demand shock from China’s power rationing in sectors
such as construction and manufacturing.
2. Lion Industries proposes sale of Antara Steel Mills for some RM663.85m | The Edge Markets (12October 2021)
KUALA LUMPUR (Oct 12): Lion Industries Corp Bhd’s 99%-owned subsidiary Amsteel Mills Sdn Bhd isselling the latter’s 100% stake in Antara Steel Mills Sdn Bhd to Esteel Enterprise Pte Ltd forapproximately US$158.82 million (about RM663.85 million) under an all-cash deal that will enable
Lion Industries to unlock the value of Antara Steel for a disposal gain of around RM403.1 million andfinance Lion Industries’ planned expansion into the flat steel business.
In an announcement to Bursa Malaysia on Tuesday, Lion Industries said Antara Steel operates aLabuan-based hot briquetted iron (HBI) plant which produces HBI mainly for the export market.
"Esteel was incorporated in Singapore on Aug 18, 2017. The principal activity of Esteel is investment
holding and its subsidiaries namely BRC Asia Ltd is involved in prefabricated steel reinforcement steel
products for use in concrete, trading of rebars and manufacturing and sale of wire mesh fences, andLee Metal Group Ltd is involved in steel merchandising and fabrication of reinforcement steel
products for the construction and building industry.
"Esteel is (100%)-owned by Advance Venture Investments Ltd.
"The original cost of investment for the sale shares by Amsteel Mills of RM138.23 million was madein 2002. The HBI plant was acquired by Antara from Amsteel Mills in 2005 at the original cost ofinvestment of approximately RM300.00 million.
"Upon completion of the proposed disposal, the Lion Industries Group is expected to realise a gainof RM403.10 million,” Lion Industries said.

[AUTHOR NAME]

14

Barring any unforeseen circumstances and subject to the fulfilment of all the conditions precedent,
the proposed disposal is expected to be completed by mid-February 2022, according to Lion
Industries.
Lion Industries said that on the assumption that the proposed disposal is completed by Dec 31, 2021,
the sale is expected to result in an estimated gain of RM403.1 million for Lion Industries for thefinancial year ending Dec 31, 2021, and that the estimated gain of RM403.1 million will translate into
an increase of approximately 59.21 sen in Lion Industries’ earnings per share.
According to Lion Industries, Amsteel Mills and Esteel had on Monday entered into the conditional
sale and purchase agreement for the proposed disposal of the 100% stake in Antara Steel for
approximately US$158.82 million (about RM663.85 million) which take into account Antara Steelshares and the Labuan plant’s assets and liabilities.
Lion Industries said Amsteel Mills is selling its entire holding of 218.01 million ordinary shares and 30
million redeemable preference shares in Antara Steel to Esteel for US$122 million (RM509.96
million), and that Esteel "agreed to pay the additional consideration to the seller for the acquisitionof the extra assets (being the Labuan inventory, the Labuan current assets and the Labuan accountreceivables) and assumption of the liabilities”.
Out of the estimated RM663.85 million disposal proceeds, RM172.14 million has been earmarked forthe financing of Lion Industries' proposed expansion into the flat steel business while RM487.21
million has been allocated for the funding for among others, the company’s working capital and newinvestment besides repayment of borrowings, according Lion Industries.
"The proceeds from the proposed disposal will be placed in deposits with financial institution(s)and/or short term money market instrument(s) in the event proceeds are not immediately utilised,”
Lion Industries said.
At Bursa on Tuesday, Lion Industries’ share trade was halted between 9:01am and 10:01am in
conjunction with the Antara Steel disposal announcement.
When Lion Industries’ share trade resumed, the stock’s price rose eight sen or 13.11% at 11:57am to
69 sen for a market value of about RM469.75 million based on the company’s 680.8 million issued
shares.
Lion Industries shares were transacted between 61.5 sen and 71.5 sen so far on Tuesday.

[AUTHOR NAME]

15

3. Chinese steel futures track raw materials lower, coking coal and coke hit daily limit down | The Edge
Markets (27 October 2021)
BEIJING (Oct 27): Chinese steel futures fell on Wednesday as raw material prices plunged amid
government intervention to cool commodity prices, while demand for the industrial metal stayedsubdued on output controls.
The most-active coking coal and coke futures on the Dalian Commodity Exchange opened down 9%
at 2,704 yuan and 3,430 yuan, respectively, hitting their daily trading limits.
The plunge came as thermal coal hit its 10% lower trading limit after the state planner said it had
asked major coal producing provinces to probe and regulate illegal storage sites, and to crack down
on hoarding behaviours.
Benchmark iron ore futures on the Dalian bourse, for January delivery, dropped 3.9% to 673 yuan by
0234 GMT. Spot prices of iron ore with 62% iron content for delivery to China <SH-CCN-IRNOR62>
remained unchanged at $121.5 a tonne on Tuesday, according to SteelHome consultancy.
"Affected by energy consumption controls, environmental curbs during winter heating season andthe Winter Olympics... steel supply is expected to be restricted continuously, iron ore demand will
be dented in the long term," analysts with CITIC Securities said in a note.
Steel rebar on the Shanghai Futures Exchange slipped 4.8% to 4,632 yuan a tonne. Hot rolled coils,
used in cars and home appliances, declined 3.8% to 5,019 yuan per tonne. Shanghai stainless steel
futures fell 1.8% to 19,705 yuan a tonne.
China's cabinet issued an action plan to bring carbon emissions to a peak before 2030, urging tocontinue cut steel capacity, improve recycling rates of steel scrap, and promote electric arc furnaces
technologies.
4. Lion Industries’ flat steel business to be revived with proceeds from Antara disposal | The Edge
Markets (27 October 2021)
THE proceeds from the disposal of Antara Steel Mills Sdn Bhd is expected to be utilised to revive Lion
Industries Corp Bhd’s hot-rolled coil (HRC) business, say industry observers. This could mean therevival of Megasteel Sdn Bhd. With the world facing a steel shortage, Megasteel’s HRC and coldrolled coil (CRC) businesses could be facing a different situation than when it was rescued by Lion
Industries back in 2018.

[AUTHOR NAME]

16

“A portion of the proceeds is likely to be utilised to revive Megasteel as it still has the plant andequipment needed to start producing again. The global market for steel products is also very
favourable these days as there is a shortage of supply,” says an industry observer.
On Oct 12, Lion Industries announced that its 99%-owned subsidiary, Amsteel Mills Sdn Bhd, would
be selling its 100% stake in Antara to Esteel Enterprise Pte Ltd for about US$158.82 million(RM663.85 million).
The majority of the proceeds will be utilised to finance Lion Industries’ expansion into the flat steelbusiness, it said in the announcement. In 2018 and 2019, the group acquired some assets ofMegasteel in a restructuring exercise with its creditors.
In a circular to shareholders regarding the proposed acquisition of Megasteel’s assets and therestructuring of its debts and liabilities, issued on Nov 5, 2019, Lion Industries said it was acquiring
several assets that belonged to the former.
The exercise included a supply and settlement arrangement with Tenaga Nasional Bhd, as well as adebt restructuring. The total consideration of the entire proposal amounted to RM604.17 million,
excluding advisers’ fees, Real Property Gains Tax and stamp duty.
As part of Megasteel’s restructuring, Lion Industries has plans to invest in a blast furnace, which will
be integrated with the existing flat steel assets. The blast furnace route is expected to yield major
production cost savings compared with the existing electric arc furnace.
That is because the blast furnace will be able to use iron ore and replace scrap metal as the raw
material to produce HRC and CRC, as well as reduce the consumption of electricity, electrode, alloy
and oxygen. The blast furnace route will contribute to lower conversion costs of raw materials andfuel resources inputs, and better-quality molten steel will improve yield in the production of HRC,
Lion Industries stated in the circular.
The preliminary estimated total cost to invest in the blast furnace with a production capacity of about
one million tonnes of molten steel per annum is about RM974 million. It will be financed via a
combination of debt, internally generated funds and/or funding from equity partners.
Megasteel was once the largest producer of flat steel products in the country. However, it stopped
production in 2016 due to financial difficulties resulting from the onslaught of imported products
from elsewhere in the region.

[AUTHOR NAME]

17

Prior to that, Megasteel, which had a production capacity of 3.2 million tonnes annually, wasproducing around one million tonnes of HRC. It last produced 20,556 tonnes of CRC in 2015, when
its capacity was 700,000 tonnes annually.
The outlook for the iron and steel industry has improved, with the price of HRC reaching US$1,895
per tonne, compared with US$966 per tonne back in April 2020. The supply chain disruption broughton by the Covid-19 pandemic, as well as the energy crunch in some major markets, have contributed
to the high price.
According to a Lion Industries spokesperson, steel demand is picking up fast, especially with flat steel
products supporting a wide range of industries and sectors, namely automotive, electrical andelectronics, oil and gas, engineering, and heavy machinery and equipment,“Demand for HRC is fully met by imports as there is no local production currently while demand forother flat steel products is partially fulfilled by imports. Moving forward, all projects focusing on hightechnology will require a high volume of flat steel products,” the spokesperson says via email in
response to The Edge’s queries.
The Malaysian government has taken a more protective stance on the steel industry, with the
Ministry of International Trade and Industry (Miti) imposing anti-dumping duties on steel products
from several Asian countries this year. On Oct 8, Miti extended anti-dumping duties on the import of
CRC for automotive end-use of all grades and specifications originating or imported from China,
South Korea and Vietnam.
The anti-dumping duties range from 7.42% to 42.08% of the cost, freight and insurance price of steel
products that originate from, or are imported, from those countries. The duties will apply between
Oct 9, 2021, and Oct 8, 2026.
The Lion Industries’ spokesperson says with supportive government policies and global economic
developments, especially in China, steel consumption is projected to increase tremendously in asustained manner. “The major developments in China’s steel policy have redefined the global steel
landscape. Already faced with the stringent environmental ruling, Chinese steel millers are paying
serious attention to lowering production to abide by their government’s policy of continual
production cuts.
“More steel products are being exported to China to cater for their domestic steel demand and thistrend is foreseen to remain intact, considering [there is] no major change in its steel policy. Coupledwith the global economic recovery post-pandemic, steel consumption is projected to be strong.
The spot price of iron ore has been trending lower since July, when it reached a high of US$219.77
per tonne. It is currently trading at US$122.83 per tonne, as investors are worried about soft demand
for steel products in China as the economy slows down.
[AUTHOR NAME]

18

However, the spot price of coal has been trending up, trading at US$243 per tonne as at Oct 14,
compared with just US$56.80 per tonne a year ago. This is due to anticipation of a much colder winterin the northern hemisphere, causing power plants to stock up on coal, especially in China.
There is also a worldwide shortage of coal, as miners grapple with the supply chain disruptions aswell as a shortage of labour in the aftermath of the Covid-19 pandemic.
All these factors will play into Lion Industries’ earnings prospects, with or without the expansion into
the flat steel business and the revival of Megasteel.
In the financial year ended June 30, Lion Industries narrowed its loss from operations to RM18.4
million from RM225 million in the previous financial year.
Its steel division recorded higher revenue of RM2.3 billion compared with about RM2 billion in thesame period last year, boosted by the higher average selling price of steel products. The division
turned a profit from operations of RM10.4 million against a loss of RM243 million last year.

[AUTHOR NAME]

19

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
visit www.malaysiasteelinstitute.com and follow us on Facebook, Twitter, LinkedIn and YouTube channel.
Tell us what you think of our newsflash. Your will help us improve our services to you.
https://www.facebook.com/CommsMsi
https://www.twitter.com/CommsMsi
https://www.linkedin.com/company/malaysia-steel-institute/
https://youtube.com/channel/UChEuWGrr0DPF3-m5rpgyW2w
www.malaysiasteelinstitute.com
MALAYSIA STEEL INSTITUTE
Level 26, Menara MITI
No. 7, Jalan Sultan Haji Ahmad Shah
50480 Kuala Lumpur

ADVERTISEMENT[AUTHOR NAME]

20