Steel sector faces glut, profit margins to be squeezed further

PETALING JAYA: Local steel millers’ profit margins, already under pressure for the past three years, are expected to shrink further, as the global steel sector faces growth in manufacturing capacity at a time when consumption growth is slowing down.

Datuk Soh Thian Lai (pic), the president of the Malaysia Iron and Steel Industry Federation, said that the “excess capacity” could be the single biggest problem facing the industry, noting that the global steel output is expected to increase by 3%, or about 1.65 million tonnes, this year. Most of this new supply is coming from steel mills in China, Soh said.