Malaysia Metals Report Q2 2012
Business Monitor International, May 2012, Pages: 47
Business Monitor International's Malaysia Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's metals industry.
BMI's View
Recent developments support our view that Malaysia's real GDP growth will continue to slow in 2012. Should global economic headwinds intensify over the coming months, this would increase the risk of a recession in Malaysia, which will impact heavily on the country’s steel industry, which made a full recovery from the effects of the 2008 financial crisis. Malaysian manufacturing output in January 2012 grew by a modest 1.2% year-on-year (y-o-y) following 4.4% in December 2011. Malaysian basic metal and fabricated metal products output rose by 5.9% y-o-y while the sales value of basic iron and steel product manufacture totalled MYR1.9bn (US$621.6mn), increasing by 8.8% y-o-y.
H112 is likely to be a challenging period for the Malaysian steel industry, with margins and earnings facing a severe squeeze, amid a slowdown on both global and domestic markets. Input costs and electricity tariffs are set to rise and domestic steel prices will weaken. Meanwhile, the eurozone crisis and a slowdown in developing countries, particularly China, will lead to resistance towards increases in the local steel price beyond MYR2,300/tonne. Iron ore prices will be affected by a rise in India’s export duty from 20% to 30% and supply disruptions from Australia and Brazil. BMI forecasts output of 6.9mn tonnes in 2012, up 5.0% y-o-y with growth declining from the 14.8% seen in the previous year.
The domestic market is likely to begin a recovery in H212 as infrastructural activities gain momentum under the Economic Transformation Programme. This should assist with an uplift in steel prices and spur output growth. Risks include Chinese dumping, creating an over-supply situation in the Southeast Asian steel market, although the effects on the domestic market will be ameliorated by the country’s 25% import duty on hot-rolled coil; the government has refused a request by Malaysian flat steel producer.
Megasteel for a rise to 35%. While the Chinese government is starting to tackle the problem by ordering the closure of small blast furnaces, removing electricity subsidies and placing a moratorium on new projects, it may not be enough to deter overcapacity in 2012. This will drive down prices as well as demand for steel from Association of Southeast Asian Nations (ASEAN) producers such as Malaysia. The industry will be boosted by capacity growth over the forecast period, with Hiap Teck Venture Bhd’s planned 700,000tpa 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.
Executive Summary
SWOT Analysis
Malaysia Political SWOT
Malaysia Economic SWOT
Malaysia Business Environment SWOT
Global Overview
Steel Outlook
Table: BMI's Steel Forecasts
Table: Steel Products And Inputs – Price Data
Commodities Forecast
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Regional Overview
Steel
Table: Top 10 Asian Steel Producers
Aluminium
Industry Forecast Scenario
Steel
Table: Malaysia’s Steel Industry, 2009-2016 (‘000 tonnes, unless otherwise stated)
Macroeconomic Forecasts
Table: Malaysia - Economic Activity
Competitive Landscape
Table: Malaysia’s Top Integrated Steel Companies
Regulatory Landscape
Company Profiles
Perwaja Steel
The Lion Group
Global Assumptions, Q212
Table: Global Assumptions, 2010-2016
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y)
Table: Developed Market Exchange Rates, 2011-2013
Table: Emerging Market Exchange Rates, 2010-2013
Developed States
Table: Developed States – Real GDP Growth, 2010-2013
Emerging Markets
Table: Emerging Markets – Real GDP Growth. 2010-2013
Consensus
Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%)
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
- Perwaja Steel
- The Lion Group
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