MBAM against safeguard measures on steel

Hongbin Qu, chief economist for China at HSBC, in a comment accompanying the PMI data said: "We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower."

KUALA LUMPUR: Master Builders Association Malaysia (MBAM) is against safeguard measures on steel products, as it feared prices of steel bars may be uncontrollable without free flow of imports.

“The price of steel bars has increased from about RM1,500 per tonne in January 2016 to about RM2,500 per tonne at present. MBAM believes that the sudden rise in steel prices over such a short period is not justified even with the greater demand from China,” president Matthew Tee said in a statement.

He said looking at our neighbouring countries, it strengthened the claim that the sudden rise in steel price was unprecedented and unwarranted.

“For example, in Singapore, NatSteel is selling at around RM1,700 per tonne. In fact, the prices of steel bars in Malaysia are currently the highest compared to other Asean countries. Besides that, steel mills in Malaysia enjoy subsidy on electricity tariff. Therefore, they should not sell higher than the region,” Tee said.

The Government has recently issued a notice of initiation of investigation for the determination of safeguard measures with regards to several categories of steel products imported into Malaysia.

The investigation was to determine whether there is serious injury caused by the increased imports of the products into Malaysia, as well as to examine the need for the safeguard measures with regards to the imports of the products into Malaysia.

MBAM said the Government should look at a sustainable long term plan on this issue, as the local producers were not supposed to be protected for their inability to be competitive even when the Government had provided the industry with numerous protection measures.

It said the financial health of the steel industry had suffered from inefficient production, fuelled by government’s support of high-cost local capacity and market intervention in the form of quotas, subsidies and tariffs.

“Although MBAM is not against profit making by the steel millers, MBAM hoped that they will not engage in excessive profiteering that can jeopardise other industries including the construction industry.

“The Government should really study the potential impact of safeguard measures on steel and how it will impact other industries including the construction industry which is supposed to grow by 8.4% this year,” it said.