The plant using the cutting torch technique to manufacture the steel billets.
KUALA LUMPUR: Malaysian Iron and Steel Industry Federation (Misif) has voiced its strong objection to the planned increase in natural gas price by Gas Malaysia Bhd
over the next three years, as the hike will adversely affect the industry players’ competitiveness in the international markets and severely jeopardise exports of steel products.
The federation said on Friday that there would be an overall increase of about 23% over the next three years, despite a reduction in tariff rates for the January-June 2017 period.
“The tariff rebate of RM0.40 per one million British thermal units (MMBtu) applicable for the January-June 2017 period, translates to an average effective tariff of RM26.31/MMBtu.
“This is just a meagre reduction of 2.74% from the previous average tariff,” said Misif in its press statement.
The Government has recently allowed revision in the base tariffs for natural gas for Peninsular Malaysia’s non-power sector from Jan 1, 2017 to Dec 31, 2019. Changes in the gas costs can be passed to the industrial consumer in the non-power sector via the Gas Cost Pass Through (GCPT) mechanism every six months.
Misif opined that with Malaysia’s exports of steel products were expected to continue its declining trend from 2.34 million metric tonnes in 2015 to 2.1 million metric tonnes this year, an upward revision will only hamper the industry’s growth.
“Malaysia, like the rest of the world, could not avoid the pressure of iron and steel imports from China.
“The total Malaysian iron and steel imports this year are expected to reach a record 8.6 million metric tonnes, with China alone contributing 40% of the imports,” said Misif.
The federation stressed that the reduction in the average tariff rebate for January-June 2017 offers merely token relief to the steel industry.
Misif also reiterated its call to the Government to adopt a moratorium of any increase in natural gas price for at least the next two years.
Earlier, the Federation of Malaysian Manufacturers also raised concerns on the impact of posible cumulative gas price increase of 22.6% by end-2019 amid the uncertainty in the global economy.
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