Jakarta — Malaysian steel industry representatives at an industry conference inJakarta this week expressed the hope that the country's new cabinet, due to besworn in soon, will continue to make infrastructure development a policyfocus.
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This was cast in doubt with the new prime minister Mahathir Mohamadsaying that his government would review all Chinese projects and renegotiate"unequal treaties" as he described them.
"We're now awaiting the appointment of the new steel minister, and arecautiously optimistic that things will continue in an orderly manner," FrankieWee, CEO of the Malaysian Iron & Steel Industry Federation, told the SouthEast Asia Iron and Steel Institute conference Monday in Jakarta.
Wee told S&P Global Platts on the sidelines of the conference that thefederation would "immediately engage with" the new minister for internationaltrade and industry ministry, which oversees the steel industry, once theperson is identified.
Lim Hong Thye, managing director of Ann Joo Steel, said he expectedgovernment spending on infrastructure to continue to be a key focus in drivingthe economy forward.
"There is a lot of talk of cancellations of projects, but the more likelyscenario is that they're going to review projects," Lim said. "I personallyfeel the right thing is to review projects and make them more feasible andeffective investment."
Of the Chinese investment in infrastructure in Malaysia, Wee said "theBelt and Road [Initiative] must benefit the nations and industries concerned."Critics of the projects have said that they don't use steel produced inMalaysia or employ Malaysian workers.
Even if development of some of the Chinese mega-projects are stalledas Malaysia's new cabinet comes to terms with them, Wee said there wereseveral other developments across the country, including in the industrial andproperty sectors, that would keep steel demand afloat.
"Construction projects won't stop just like that," he said.
Apparent steel consumption in Malaysia in 2017 fell 7.9%, the seconddeepest fall after Thailand among the ASEAN-6 countries, to 9.4 million mt,due to a slowdown in construction activity, SEAISI data showed. Others thatsaw declines were Singapore and Vietnam, while that in Indonesia and thePhilippines grew.
The relook at the country's infrastructure projects comes as a number ofMalaysian steelmakers restarted shut plants as well as new capacity prior tothe general election in May, which saw the Pakatan Harapan come to power.
These included Lion Group's Amsteel Mills EAF and billet casting linewith a capacity of 660,000 mt/year in Banting, Selangor, and Antara SteelMill's EAF and billet casting line with capacity of 700,000 mt/year in PasirGudang, Johor.
They also include Eastern Steel's slab casting capacity of 700,000mt/year, and Alliance Steel's newly lit blast furnace, with billet castingcapacity of 3.5 million mt/year.
The startups have mainly been attributed to higher steel prices in thedomestic market, after the Malaysian government put in place safeguardmeasures that reduced imports of steel.