Thursday, August 25, 2011

Megasteel severely impacted by HRC imports

KUALA LUMPUR: Megasteel Sdn Bhd's expansion plan and proposal to invite foreign partners to invest in the group's steel operations have been jeopardised by the imports of hot rolled coils (HRC).

It said on Thursday, Aug 25 the rising imports had severely affected its operations and performance and it might have to start retrenching its workers, despite calls to the government, urging it to curb HRC imports.

It refuted the statement by the Ministry of International Trade & Industry (MITI) that the increase in imports of HRC by 35% from January to Sept 30, 2010 'have not caused or threaten to cause serious injury to the domestic industry'.

'Despite the existing import duty of 25% on HRC, a substantial amount of imports are coming in without duty, that is 0% under Asean CEPT (Common Effective Preferential Tariff) and duty exemption given to qualified manufacturers,' it said.

Megasteel said the rest include HRC by importers who circumvented the duty structure. The 25% import duty is also levied on the downstream products, that is cold roll coils (CRC), coated sheets as well as pipes and tubes.

The continued imports, it said, was causing hardship to the companies and the workers. Megasteel and its sister companies have 4,600 employees in the Lion steel complex in Banting and also those employed in the downstream, supporting and ancillary industries.

It said it may have to start retrenching if the situation continues. 'It will also jeopardise the company's plans to invest further in upstream and expansion projects as well as the plans to invite foreign partners to invest in the group's steel operations,' it said.

Megasteel said it understood the government was taking measures to strengthen the industry by plugging the loopholes and leakages taking place. This will put a stop to manipulations of imports and bring back the price and market stability to the HRC sector.

'Megasteel is also looking into other avenues like anti-dumping to address the problem of excessive imports at dumping prices into the country,' it said.

Due to the non-level playing field created by Free Trade Agreements, many steel producing countries have imposed safeguard measures to protect their local steel industries.'' India, Indonesia and the Philippines are the most frequent users of safeguard proceedings in Asia, with 33, 11 and nine respectively.

Indonesia has filed 11 investigations of which five are related to the steel industry. In particular, it has imposed anti-dumping duty of 48.46% on HRC from Malaysia and six other countries, as well as safeguard measures on steel wire nails and steel wire ropes. It has also tightened its industrial standards as non-tariff barriers against steel imports.

Thailand has imposed anti-dumping on HRC from 16 countries, including Malaysia with a duty of 23.57%, besides enforcing its industrial standards as a non-tariff barrier.

'The implementation of all these measures by Indonesia and Thailand has in fact created a conducive and stable environment, attracting foreign investments into their steel industry by major steel mills such as Posco, Nippon Steel, Wuhan Steel etc,' it said.

Megasteel said it would discuss with the government on building a supportive environment for the local steel industry to grow, upgrade and expand in the interests of both the upstream and downstream industries.



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