January 2022

NOTICEBOARD

THE STEELBILLETREBARSTEEL WIRE ROD

RM2,650

RM3,000

RM3,258

SCRAPIRON ORE

RM1,982

RM530

Trade Performance
Malaysia’s Trade Performance, January 2022
Malaysia’s Iron and Steel trade value in January 2022 was recorded at RM6.1 billion,
increased by 48.1 percent compared to RM4.1 billion in January 2021. However, the tradebalance has widened from trade deficit of RM278 billion in 2021 to trade deficit of RM322
million in 2022.
Malaysia’s export in January 2022 has expanded by 50.4 percent to RM 2.9 billion fromRM1.9 billion in January 2021. Three main export destination in January 2022 were to China,
the United States and Thailand, represent 33 percent, 13 percent and 8 percent of the totalexport value of the month, respectively.
Import in January 2022 grew by 46 percent from RM3.2 billion in January 2022 from RM2.2billion in January 2021. Top three Malaysia’s import countries in January 2022 were China,
Korea and Japan represent 20 percent, 16 percent and 14 percent of the total import valueof the month, respectively.

Malaysia Trade Performance of Iron & Steel Industry
Month Trade ValueJan 2022: RM6.1billion
Jan 2021: RM4.1billion

Jan 2022: (RM322million)
Trade Deficit

48.1 % M-o-M changeMonth Balance of Trade
16.0 % M-o-M change

Jan 2021: (RM278million)
Trade Deficit
Month Export ValueJan 2022: RM2.9billion
50.4 % M-o-M change

Jan 2021: RM1.9billion

Month Import ValueJan 2022: RM3.2billion
46.0 % M-o-M change
Jan 2021: RM2.2billion[AUTHOR NAME]

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MSI WITH YOUMITI AND AGENCY MONTHLY ASSEMBLY 2022
On the 24th of January 2022, MSI took part in the monthly assembly for MITI and Agencies held at Dewan
Perdana MITI at MITI tower. This was the first meeting for the year and was attended by Senior Minister ofInternational Trade and Industry Dato’ Seri Azmin Bin Ali, Deputy Minister of International Trade and Industry
Datuk Lim Ban Hong, Secretary General of MITI
Datuk Lokman Hakim Ali, Deputy Secretary
Generals of MITI, Dato’ Sri Norazman bin Ayob, Mr.
Hairil Yahri Yaacob, and Datuk Bahria Mohd Tamil.
Also in attendance were all the heads of agencies.
Besides sharing the achievements by the ministryand its agencies, the tragedy of the recent floods
along with the plight of victims, many of whom
include MITI members. Many from within theministry and agency was affected and collectively,
those affected were given assistance by theministry. The Minister also recognized many of theindustry which had helped in the ministries effort in
helping with the flood relief. Some of which include, theLion Parkson Foundation, Malaysian Iron and Steel
Industry Federation, Malaysian Steel Association, theFederation of Malaysian Manufacturers, Ye Chiu NonFerrous Metal (M) Sdn Bhd, and many others who havecontributed either in cash or in kind.

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MSI BRIDGING GAPS
WEBINAR ON PRICE CONTROL AND ANTI PROFITEERING ACT 2011 MECHANISMS FOR THE
IRON AND STEEL INDUSTRY
On the 26th of January 2022, MSI together with the Ministry of Domestic Trade and Consumer Affairs (MDTCA)
hosted a webinar upon request to members of MISIF to explain the mechanisms for the price control andanti-profiteering act 2011. Items covered in the webinar included price control mechanisms which applies toall product with no exception to iron and steel.
MDTCA officers also noted where if there is an issue
on price escalation, the manufacturer and wholesaler
will be engaged in the investigation.

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MSI TRUPENJANA PROGRAMME BATCH 8 UPSKILLING AND RESKILLING
On the 8th of January 2022, MSI organized the 8th session of trainings under the PENJANA Upskilling andReskilling programme for participants in the iron and steel industry. In the 8th batch, the programme was donein a hybrid manner having both online and in-person attendance which was held at Banting that includes newworkers for Lion Steel Sdn. Bhd. & Alliance Steel (M) Sdn. Bhd.

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6PENJANA PROGRAMME BATCH 9 UPSKILLING AND RESKILLING
On the 19th of January 2022, MSI organized the 9th session for the PENJANA Upskilling and Reskilling
programme for participants in the iron and steel industry. The session was held at the premises of Amsteel
Mills Sdn Bhd in Bukit Raja, Klang. This session was held in hybrid manner with a total of 50 participants which
includes in-person and online participants representing trainees from Amsteel Mills Sdn. Bhd., Ann JooBerhad, Wei Da Industries Sdn. Bhd. & Alliance Steel (M) Sdn. Bhd.

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STEEL FACTS[AUTHOR NAME]

8EVENTS HIGHLIGHT[AUTHOR NAME]

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10STEEL NEWS1. 2021 Newsmakers: Metal companies step up expansion as steel prices reach molten levels
Date: 13 January 2022
Source: 2021 Newsmakers: Metal companies step up expansion as steel prices reach molten levels | The
Edge MarketsTan Sri David Law Tien Seng
Executive deputy chairman of Hiap Teck Venture Bhd
Steel and mining magnate Tan Sri David Law Tien Seng has big plans for Main Market-listed Hiap Teck
Venture Bhd and its 27.3%-owned unit Eastern Steel Sdn Bhd (ESSB). Three years after ESSB fired up its
dormant fully integrated blast furnace steel plant in Kemaman, Terengganu, the steel slabs and billets
producer is now ready for its next big step — a RM3 billion expansion that includes venturing into the hotrolled coil (HRC) business. In an exclusive interview with The Edge in November, Hiap Teck executive
director Law Wai Cheong disclosed that ESSB — a joint venture (JV) between Hiap Teck, its Chinese partner
Shanxi Jianlong Industry Co Ltd and Chinaco Investment Pte Ltd — had an ambitious expansion plan toalmost quadruple its steelmaking capacity, from 700,000 tonnes a year currently to 2.7 million tonnes by2023. “We have allocated capital expenditure of RM3 billion for two main purposes — to add a blast furnace
to make molten steel and build a new HRC plant,” he said. It is estimated that the new HRC capacity of twomillion tonnes will provide ESSB with an additional RM7 billion in revenue. Wai Cheong, 35, is the son ofDavid, better known as T S Law, who owns a 28.57% stake in Hiap Teck, where he is executive deputychairman. It is worth noting that T S Law also controls three Australia-listed mining companies: iron ore
miner GWR Group Ltd, tungsten miner Tungsten Mining NL and gold miner Western Gold Resources Ltd(WGR). WGR was spun off from GWR before it was listed in July this year. Its gold mining business, dubbed
the Gold Duke Project — formerly known as Wiluna West Gold Project — is now an advanced exploration
project. — By Liew Jia Teng
Tan Sri Paul Koon Poh Keong
Co-founder and CEO of Press Metal Aluminium Holdings Bhd
Press Metal Aluminium Holdings Bhd co-founder and CEO Tan Sri Paul Koon Poh Keong, who shares ametal fortune with four elder brothers, was the biggest dollar gainer on the 2021 Forbes Malaysia Rich
List. The share price of Press Metal was up as metal prices recovered, adding US$3.4 billion to thewealth of Koon and his brothers, and propelling them to No 3 with a net worth of US$6.4 billion. Press
Metal is a homegrown aluminium corporation with an extensive global presence. Established as a
privately owned local aluminium extrusion company in 1986, it has grown into an integrated
aluminium giant. With a smelting capacity of 1.08 million tonnes and an extrusion capacity of 210,000
tonnes a year, Press Metal is the largest integrated aluminium producer in Southeast Asia.
In early September, the company’s share price rose to a record high of RM5.81 as aluminium prices
climbed to their highest in more than a decade on the back of concerns about raw material supply
amid a coup in Guinea — a major supplier of bauxite. Bauxite is the feedstock used to make alumina,
which is further processed into aluminium, and Guinea accounts for more than half of all imports fromChina.The political instability in Guinea had already rattled global aluminium markets as prices inLondon notched a fresh 10-year high and futures contracts in China climbed to their highest since2006. Press Metal’s share price jumped to a fresh peak of RM6.20 on Oct 14. External factors aside,
the strong optimism was also partly due to the progressive ramping-up of the group’s Phase 3
Samalaju expansion project. Another catalyst is the targeted full commissioning of Press Metal’s[AUTHOR NAME]

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25%-owned PT Bintan alumina refinery (Phase 2) in the first half of 2022, which will provide anadditional boost to the group’s earnings.With the anticipated increase of production volume, Press
Metal aims to expand into new markets for its value-added products next year. — By Liew Jia Teng
Tan Sri William Cheng Heng JemChairman of Lion GroupTan Sri William Cheng Heng Jem has been trying to revive his hot rolled coil (HRC) operations for sometime now. Key to his plans is a strong partner and, of course, capital that will be largely used to build
a blast furnace. For the uninitiated, HRC is used to create cold rolled coil which, in turn, is used in themanufacturing of such items as electrical goods and automobiles. Until it ceased operations in 2016,
Cheng’s Megasteel Sdn Bhd was the only HRC maker in the country, but owing to cash constraints,
Megasteel’s assets were hived off to sister company Lion Industries Corp Bhd for RM537.73 million in
2018. Cheng has a 34.59% stake in Lion Industries but is not on the board of the company, leaving theoperations to family members. When it was still running, Megasteel’s issues hinged on the use of scrap
iron as its raw material, with its chief asset being an electric arc furnace, despite a blast furnace being
deemed more efficient. There were also issues with transport as Megasteel’s operations were inBanting, Selangor, unlike many other HRC makers that initiate operations close to a port to reducetransport costs. In its last recorded financial performance for the financial year ended June 2018, thecompany posted an after-tax loss of RM1.88 billion sans any revenue as operations had ceased. Its
accumulated losses were at an astronomical RM5.31 billion. For the period in review, its total liabilities
amounted to RM5.19 billion while total assets were RM558.78 million. Despite the past difficulties,
Cheng has been adamant about restarting the HRC operations. Will the 78-year-old finally secure apartner and kick-start the HRC operations, and will he fare better this time around? — By Jose Barrock[AUTHOR NAME]

122. Unstable supply due to China’s blue sky policy
Date: 31 January 2022
Source: Unstable supply due to China’s blue sky policy | The Star
PRICES of raw materials have increased due to international factors but for Malaysian importers, thisproblem is aggravated by the closure of more factories in China. In China, more factories were closed
in northern production centres to curb smog and pollution as Beijing prepares to host this year’s
Winter Olympics. There are two sides to the coin. While many companies suffer from this unstablesupply and high prices, there are others that will benefit from businesses potentially diverted fromChina. They should, therefore, get ready to qualify to be selected. From 28 cities, the efforts to reduce
pollution in China have been extended to 64 cities this winter, covering five provinces, affecting themost important heavy industrial hubs. This includes Tangshan, the world’s biggest steel-producing city
in Hebei province; Shanxi, the largest coal-mining province and major aluminium-producing provincesin Shandong and Henan. Among Malaysian importers, a small and medium scale enterprise (SME)
importing structural steel from Tangshan has been affected ever since China implemented its blue sky
policy since 2018. “Of course, this is affecting us, when they have an important event, they will enforce
this blue sky policy even more to control their environment,’’ said Hong, a Small and Medium
Enterprises Association (Samenta) member who declined to reveal his full name. As factories thatcannot comply with the blue sky policy are forced to shut down, the working hours become limitedand production lead time gets longer, for example, from one to two months now. “But we expect thesituation might be different after the Winter Olympics,’’ said Hong. Hong’s company produces finishedgoods from wire rods; it makes British steel reinforcement material in concrete, and also whole steel
for building material structural steel like angle bars, channels, beams and others. As Malaysia does nothave manufacturing plants to process structural steel angle bars, channels and beams, companies like
Hong’s are importing from China, Thailand, Turkey and others. Another Samenta member who also
declined to reveal his full name, Tong, sources electro-galvanised (EG) steel coils from local steel
service centres or companies that, in turn, buy steel coils from local and overseas steel mills andmanufacturers. “The hikes in EG steel coil prices have been unmanageable,’’ said Tong. “Even though
we buy from local distributors, we suffer the price hikes which have doubled in two years.’’ Tong’s
customers are project-based in the construction industry, where projects may take more than twoyears to complete. “We will normally hold the prices firm for six to 12 months, even though prices ofraw materials have increased during that period. “When prices of raw materials fluctuate too much,our costs will be seriously impacted,’’ said Tong. Tong’s company manufactures metal doors andwindow frames for the construction industry. “Over the past one to two months, prices ofinternational steel/iron ore have decreased substantially but local steel prices do not seem to becoming down and we cannot predict how long this problem will last,” said Tong. Tong’s company istrying to source for steel coils from other countries such as Vietnam and Japan but it may not be costeffective due to high logistics and import costs. “Our consumption is not big; we are unable to absorb
most of the additional costs, which will have to be passed down to customers; steel coils take up amajor part of our production costs. We cannot substitute these steel coils because all types of steel
prices have increased steeply,’’ said Tong. The prices of EG steel coils have doubled since January,2020
when it was RM2,850 per tonne; by September 2020, it had jumped to RM3,200 per tonne and byDecember 2020, it was RM3,650 per tonne. By January 2021, it had surged to RM4,200 per tonne;
April 2021 (RM5,100-RM6,000 per tonne) and November 2021 (RM6,600 per tonne).

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Apart from an unstable supply schedule, the pandemic has caused another problem of high sea-freightrates. Shippers were caught off-guard by the impact of Covid-19 on the global supply chain, which had
resulted in the lack of ships and containers, forcing a sharp rise in sea freight charges. While the pricehikes of steel coils are due to international factors and a shortage of supply in the local market,ensuring a stable supply in the local market will help to reduce prices, said Tong. The government
should review the tariff code and increase the number of products that companies can import, said
Hong. Some see the positive side to this problem. China’s blue sky policy mainly involves scaling backon heavy industries with high pollution, and may be temporary. Nevertheless, the curtailment ofproduction has impacted world commodity prices. Competing aluminium producers in Malaysia, forexample, have benefited from the resulting surge in prices while iron ore producers have also enjoyed
the uptick in iron and steel prices, said RHB Investment Bank head of regional equity research,
Alexander Chia. As the problem with production is especially severe before major events such as thecoming Winter Olympics, importers should stock up supplies beforehand. However, this leads to one
more bottleneck among the so many plaguing the trade system, said former Inter-Pacific Securities
head of research Pong Teng Siew. While there is some impact on importers that depend on exports
from China, there are countries that may turn to Malaysia for imports due to the temporary shortage
from China, said Areca Capital CEO Danny Wong. “SMEs are not big manufacturers; they should ensurethat they adhere to global environmental, social and governance standards. “Companies from theUnited States and Europe may consider sourcing from us,’’ said SME Association of Malaysia nationalsecretary-general C.S. Chin. These are tough times for SMEs as they face challenges from all sides, andhelp in getting a stable supply of raw materials is urgently required.

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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 inMalaysia; and to promote iron and steel product standardization and utilization within Malaysia. For more information, please
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