Wednesday October 24, 2012
Steel anti-dumping duty
By HANIM ADNAN
PETALING JAYA: In a first for the local steel industry, Malaysia will likely impose an anti-dumping duty by Feb 19 next year if the Government is satisfied that the import of steel wire rods (SWR) from certain countries indeed constitutes dumping and is causing material injury to domestic steel players.
This matter will be decided after the International Trade and Industry Ministry (Miti) concludes its investigation into a petition alleging that imports of SWR from Taiwan, China, Indonesia, South Korea and Turkey are priced much lower than the price in the domestic market of these countries.
An industry source close to Miti said the final leg of the probe, which would include the outcome of the verification visits to the foreign producers' premises, would be carried out over the next three months.
“If affirmative, the rates of the anti-dumping duty to be imposed will vary for each alleged country, depending on the pricing and volume brought into Malaysia,” he added.
Miti said in a statement on Monday that it had completed the preliminary anti-dumping investigation on the imported SWR from the alleged countries and found sufficient evidence to continue with further investigations.
As a temporary measure, Miti has imposed a provisional anti-dumping duty ranging from nil to 33.62%, which will be applied on imports from the alleged countries and shall take effect from yesterday to Feb 19, 2013. (See chart)
The petitioner claims that the cheaper imports were causing material injury to the domestic industry in Malaysia.
According to OSK Research analyst Ng Sem Guan, the latest “temporary” anti-dumping duties by Miti on the SWR imports from the alleged countries would bring cheers to major local players such as Amsteel, Kinsteel Bhd, Southern Steel Bhd and Ann Joo Resources Bhd because they are SWR producers.
Although the Miti probe looks at five countries, Ng said it was learnt that the major competition for these companies was mainly from the imported SWR from China.
Malaysian Iron and Steel Federation president Datuk Soh Thian Lai viewed the anti-dumping duty on SWR as positive to the local steel sector.
In fact, at a steel conference late last month, Soh has called for the Government to be decisive in imposing temporary anti-dumping measures on the cheaper imported steel goods currently flooding the country, especially from China.
He said the influx of imported steel goods into Malaysia following the drop in global steel prices in the past months would continue to put pressure on local producers' operating margins in the second half this year and first half next year.
Asean Iron and Steel Council president and South-East Asia Iron and Steel Institute chairman Chow Chong Long said most of the steel exports from China, unlike Japan, were directly competing with similar products produced in Asean countries.
“On the other hand, there has been very little export of steel products from Asean to China. Thus, the steel trade is basically a one-way traffic,” he said.
He explained that the situation basically arises out of the duty and tax rebate structure of the Chinese steel industry.
In its effort to discourage the export of low-value-added steel products from China, the Chinese government imposes export duty on such products and provides rebates for the export of high-value-added products.
Therefore, some steel exporters from China were taking advantage of the loopholes in the duty structure by exporting steel added with the minimum amount of boron, and recently chromium, and declared under alloy steel, which enjoys tax rebate.
In addition, these products, which are competing directly with those produced in the region, also came in under tariff preferences accorded in the Asean-China Free Trade Agreement (ACFTA), implemented in January 2010.
“From this development, one may be excused for thinking that the Chinese government has purposely designed its tax structure in order to dominate the steel market in Asean under ACFTA.
“In any case, the governments in the region are taking note of this and many are instituting measures to address the problem,” Chow added.