The Malaysian government plans to engage with China and Southeast Asian authorities to tackle overcapacity in the steel industry.
“The challenge [for the steel industry] is overcapacity. I hope Malaysian steel industry together with the government will be able to have more dialogue and also more be collaborative for cooperation. We hope we can engage with China in a collaborative manner, and also engage with ASEAN states to look at the overcapacity issue in Southeast Asia,” Ministry of Investment, Trade and Industry (Malaysia) deputy minister Liew Chin Tong told reporters on the sidelines of the Malaysian Iron & Steel Industry Federation (MISIF) trade forum that was attended by Kallanish.
However, he did not give a timeline for the engagement, only saying that the ministry will “work on it.” He also emphasises that he hopes to tackle the issue in a collaborative manner, instead of curbing Chinese investment in Malaysia’s steel industry.
He also notes that China’s experience is something that industry players and authorities could share as the Chinese government has successfully tackled overcapacity by taking out up to 150 million tonnes/year of capacity from the steel industry.
It notes that the Southeast Asia Iron and Steel Institute (SEAISI) continues to see unsustainable overcapacity looming in ASEAN-6 – Vietnam, Thailand, Singapore, Philippines, Malaysia, and Indonesia.
SEAISI secretary general Yeoh Wee Jin says in the forum that he expects that the new integrated mill capacities of 71.9m t/y and new electric arc furnace capacities of 4.7m t/y in ASEAN will lead to overcapacity in the region in the next few years.
“Should all integrated mill capacities come on stream, there will be more than 70mt [per year] of steel coming from all the potential integrated mills in ASEAN,” he says, adding that the potential overcapacity would lead to industry losses.
According to him, ASEAN existing steel capacity stands at 75.3 million tonnes/year. This includes steel capacity of 23.2m t/y in Vietnam, 13.8m t/y in Thailand, 16.1m t/y in Malaysia, 0.8m t/y in Singapore, 18.5m t/y in Indonesia, and 3m t/y in the Philippines.
He foresees steel capacity in ASEAN reaching 151.9m t/y. This will include steel capacity of 28.8m t/y in Vietnam, 13.8m t/y in Thailand, 48.9m t/y in Malaysia, 0.8m t/y in Singapore, 41.5m t/y in Indonesia, and 18.2m t/y in the Philippines.
Siew Mung Tan Malaysia