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Malaysian Iron and Steel Industry Federation asks for 3-year freeze on gas prices

Singapore — The Malaysian Iron and Steel Industry Federation has asked the governmentto maintain natural gas prices at the current level for about three years, itsaid Wednesday.

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Gas Malaysia said on June 13 it would raise the price of natural gas toMR32.69/MMBtu ($8.15/MMBtu) from MR32.52/MMBtu currently from July 1 toDecember 31.

The request comes ahead of the expiry of a safeguard duty of 10.4% on hotrolled steel plate imports on July 1. The duty, which took effect on July 2,2015, was for three years and was meant to protect the domestic steelindustry.

Since May 2014, Gas Malaysia has revised the price upwards fromMR16.07/MMBtu to MR32.69/MMBtu, the federation said. "This eighth hike ...could make the local iron and steel industry uncompetitive in theinternational market," it added.

Overall the hikes totaled MR16.62/MMBtu or 103%, the federation said,adding that this was equivalent to more than MR107 million in added costs over2014-2018.

The industry uses about 2 MMBtu of natural gas to make 1 mt of steel.

"The impact from the higher gas cost will reflect in a higher productioncost to the industry and would invariably affect the viability andcompetitiveness of the domestic iron and steel industry," it said.

In 2017, Malaysia produced about 2.8 million mt of crude steel, accordingto World Steel Association data.

--Clement Choo, clement.choo@spglobal.com

--Edited by E Shailaja Nair, shailaja.nair@spglobal.com