Singapore — Malaysia will see higher demand for steel for civil works as the construction sector is expected to grow by 3.7% in 2020, up from the estimated 1.7% for 2019, the Ministry of Finance said, citing "acceleration and revival of mega projects as well as building of affordable homes."
The sector is expected to be worth MR69.9 billion ($16.7 billion) in 2020, up by about 3.7% against an expected MR67.4 billion in 2019, the ministry said in its Economic Outlook 2020 for the country.
Among the revived mega infrastructure projects is the 640 km-long East Coast Rail Link project, which resumed work on July 25 after a year-long suspension. The bulk of domestic demand for Malaysian steelmakers will likely come from construction of the 20 stations planned for the rail project as there is no rail maker in Malaysia.
As of October, the ECRL project is on track for completion by the end of 2026, Darwis Abdul Razak, chief executive officer of Malaysia Rail Link, said.
"Current work covers 17 locations and will be expanded to 27 locations before the year-end," he said.
Over Q4, tender packages are expected to be issued for civil works (excluding tunnel works) involving a 223-km length from Dungun to Mentakab.
"...works for Section B (Dungun to Mentakab) is targeted to peak by the third quarter of next year once the land acquisition process is completed. By then, ongoing works along the 223 km-stretch, which includes tunneling works at 23 locations and 39 km of viaducts at 65 locations, will progress smoothly," Razak said.
In addition to ECRL, other projects such as the Light Rail Transit 3, Mass Rail Transit 2, Electrified Double Track Gemas-Johor Bahru, Klang Valley Double Track Phase 2, Central Spine Road, Pan Borneo Highway and Coastal Highway in Sarawak are expected to boost Malaysia's civil engineering segment, the ministry said.
Malaysia plans to allocate MR1.1 billion in 2020 for various infrastructure projects and MR1.6 billion to build new hospitals.
"The government would provide support for the construction of primary infrastructure, while the private sector will invest in critical business assets...," Lim Guan Eng, minister of finance, said.
Bank Negara Malaysia's enhancement of its Fund for Affordable Homes "will enable first-time house buyers to enjoy a lower monthly commitment of up to 20%, which in turn will support the (residential) subsector," the ministry said. Since September 1, the limit on household gross income to be eligible for the fund was nearly doubled to MR4,360 from MR2,300.
Amid the expected growth in the construction sector, Malaysia took steps to stem imports of surplus steel into the country, especially rebar.
Malaysia has slapped provisional antidumping duties on rebar from Singapore and Turkey. The duties of zero to 20.09%, are effective for 120 days from September 23, pending a final determination expected before January 21, 2020.
Long steel products totaled 5.35 million mt and comprised 57% of the country's total steel consumption in 2017, data from the Malaysian Iron and Steel Industry Federation showed.
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