Malaysia Metals Report Q1 2012
Includes 3 FREE quarterly updates
The Malaysian steel industry is developing apace and will continue to grow over the next five years, despite economic headwinds, according to BMI’s latest Malaysia Metals Report.
BMI estimates Malaysian crude steel output grew 14.8% year-on-year (y-o-y) in 2011 to 6.54mn tonnes, while hot-rolled output grew 16.1% to 5.74mn tonnes. This is a significant upward revision from the previous quarter. We believe domestic demand remained resilient in H211, offsetting the effects of a US downturn, as a tight labour market provided support for private consumption growth. The implementation of the government's Economic Transformation Plan continued to provide support for gross fixed capital formation growth. Hot-rolled output has been bolstered by the country’s 25% import duty on hot-rolled coil; the government has refused a request by flat steel producer Megasteel for a rise to 35%. Imports remained subdued due to the high tariff barrier, growing just 0.2% to 5.05mn tonnes in 2011. We forecast a gradual rise to 5.97mn tonnes by 2016. Nonetheless, Malaysia's economic growth should remain subdued in coming quarters. In light of a deteriorating outlook for external demand, we downgraded our real GDP growth forecasts to 3.2% for 2012. Steel consumption and output growth will slow accordingly.
The construction sector is vital to the recovery of the Malaysian steel market as it represents 71% of the country’s steel consumption. Construction activity was boosted by the sizeable influx of public infrastructure projects being implemented in the latter half of 2011. Accordingly, we are maintaining our 2011 full-year estimate for the Malaysian construction sector, with real growth projected to reach 5.6%yo- y. However, beyond 2011, we expect construction activity to decline due to a lack of financing from the private and public sectors, pulling down construction real growth to 4.8% in 2012 and falling in subsequent years. This will limit growth in the Malaysian long steel market.
The industry will be boosted by capacity growth over the forecast period with Hiap Teck Venture Bhd’s planned 700,000 tonne per annum (tpa) first phase coming onstream in mid-2013 with a further 800,000tpa in the second phase. Around 40% of output will be exported to Asian markets with the rest sold locally. This should help ensure output of 9.5mn tonnes in 2016, up 46% over 2011 levels.
Malaysia will increase the value of production with downstream operations. The commissioning of the first phase of Acerinox’s Bahru Stainless complex in December 2011, with capacity of 240,000tpa, has significantly enhanced the competitiveness of Malaysian stainless steel production. The construction of phase two is now proceeding with start-up scheduled for Q113, increasing capacity to 400,000tpa and allowing Bahru Stainless to produce special steel grades and thin gauges, adding more value to production. In its final stage, the project will become an integrated stainless steel factory with a melting capacity of 1mn tpa and a cold rolling capacity of 600,000tpa to be established by 2020. Around 70% of output will be destined for export.
The Malaysian steel industry is developing apace and will continue to grow over the next five years, despite economic headwinds, according to BMI’s latest Malaysia Metals Report.
BMI estimates Malaysian crude steel output grew 14.8% year-on-year (y-o-y) in 2011 to 6.54mn tonnes, while hot-rolled output grew 16.1% to 5.74mn tonnes. This is a significant upward revision from the previous quarter. We believe domestic demand remained resilient in H211, offsetting the effects of a US downturn, as a tight labour market provided support for private consumption growth. The implementation of the government's Economic Transformation Plan continued to provide support for gross fixed capital formation growth. Hot-rolled output has been bolstered by the country’s 25% import duty on hot-rolled coil; the government has refused a request by flat steel producer Megasteel for a rise to 35%. Imports remained subdued due to the high tariff barrier, growing just 0.2% to 5.05mn tonnes in 2011. We forecast a gradual rise to 5.97mn tonnes by 2016. Nonetheless, Malaysia's economic growth should remain subdued in coming quarters. In light of a deteriorating outlook for external demand, we downgraded our real GDP growth forecasts to 3.2% for 2012. Steel consumption and output growth will slow accordingly.
The construction sector is vital to the recovery of the Malaysian steel market as it represents 71% of the country’s steel consumption. Construction activity was boosted by the sizeable influx of public infrastructure projects being implemented in the latter half of 2011. Accordingly, we are maintaining our 2011 full-year estimate for the Malaysian construction sector, with real growth projected to reach 5.6%yo- y. However, beyond 2011, we expect construction activity to decline due to a lack of financing from the private and public sectors, pulling down construction real growth to 4.8% in 2012 and falling in subsequent years. This will limit growth in the Malaysian long steel market.
The industry will be boosted by capacity growth over the forecast period with Hiap Teck Venture Bhd’s planned 700,000 tonne per annum (tpa) first phase coming onstream in mid-2013 with a further 800,000tpa in the second phase. Around 40% of output will be exported to Asian markets with the rest sold locally. This should help ensure output of 9.5mn tonnes in 2016, up 46% over 2011 levels.
Malaysia will increase the value of production with downstream operations. The commissioning of the first phase of Acerinox’s Bahru Stainless complex in December 2011, with capacity of 240,000tpa, has significantly enhanced the competitiveness of Malaysian stainless steel production. The construction of phase two is now proceeding with start-up scheduled for Q113, increasing capacity to 400,000tpa and allowing Bahru Stainless to produce special steel grades and thin gauges, adding more value to production. In its final stage, the project will become an integrated stainless steel factory with a melting capacity of 1mn tpa and a cold rolling capacity of 600,000tpa to be established by 2020. Around 70% of output will be destined for export.
Contents
Executive SummarySWOT Analysis
Malaysia Political SWOT
Malaysia Economic SWOT
Malaysia Business Environment SWOT
Global Market Overview – Steel Forecast
Table: BMI’s Steel Forecast
Table: Steel Price Data
Commodities Forecast
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Regional Overview
Table: Top 10 Asian Steel Producers, 2009
Industry Forecast Scenario
Steel
Table: Malaysia’s Steel Industry, 2008-2016 (‘000 tonnes, unless otherwise stated)
Macroeconomic Forecasts
Table: Malaysia – Macroeconomic Activity, 2011-2016
Competitive Landscape
Table: Malaysia’s Top Integrated Steel Companies
Regulatory Landscape
Company Profiles
Perwaja Steel
The Lion Group
Global Assumptions
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Emerging Markets
Emerging Markets
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Consensus
Consensus
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)
Country Snapshot: Malaysia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2000-2003
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Manufacturing Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks Skip to top