BMI's Malaysia Metals Report for Q2 2013 looks at the anti-dumping duties introduced by the government in October 2012 and details which will become permanent. We have also revised our view on the tin sector given recent difficulties with the Indonesian government. We also examine how Malaysian steelmakers are responding to the challenge of falling prices and increased input costs. We warn that operating margins will remain under threat while domestic steel makers struggle to compete with low-cost Chinese imports.
For Q213, we have downgraded our production forecasts in light of the prolonged holdout between Malaysia Smelting (MSC) and PT Koba Tin due to the renewal of Koba Tin's contract-of-work agreement with the Indonesian government. The continued decline of tin prices, which peaked at US$25,500/ton in February 2012 before falling to its 2012 low of US$17,345/ton, was also a major contributor to Malaysia cutting back on production.
Over the last quarter BMI has revised the following forecasts/views:
- BMI does not foresee any significant increase in the country's refined tin consumption rate as end-use industries, such as electronics or solders, are typically not Malaysia's strong points. We have downgraded our 2017 refined tin production forecasts in the face of a continued difficult operating environment from 62mnt (million tons) to 45mnt.
- The Malaysian steel industry will not escape the challenges of the weakening steel prices and lower demand seen across the international market. The situation in the Malaysian market is set to remain uncertain and therefore volatile until the results of the June 2013 general election. Capacity growth in 2013 will come from the 700ktpa expansion of Hiap Teck Venture Bhd.
- The Malaysian government will continue to enact further protectionist measures to improve the competitiveness of its local steel industry. Following a trial period, anti-dumping duties have been in force since February 2013 for steel wire rods.