Business & Industry

May 1, 2016

MALAYSIANS PREFER INTERNAL STEEL SUPPLIERS

Malaysia is nowadays the fourth main importer of steel in all Southeast Asia, having the People's Republic of China as its main supplier. China is also a world leader in steel production, followed by Japan and the Unites States of America (USA). Your VIP Partner went to understand the evolution of the steel market in Malaysia. 

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Although being a producer of this raw material, the cost of steel production and its derivatives in Malaysian mills is still excessively high, a result of the Chinese competition (the world's greatest producer with more than 822 billion tons in 2014), which forced the contraction of prices in the international markets. Some of these markets show small growth and even contraction in some cases.

Nowadays, the production of steel in Malaysia is far below its real capabilities, due not only to the low academic education of workers, but also to the fear of international markets development, which ends up discouraging a bigger effort in production in a country where two car brands, very important in this part of the globe, are established: Proton and Perodua. However, the MISIF - Malaysian Iron and Steel Industry Federation, envisions a national steel production growth of about 4% until 2018, although this does not correspond to the predictions of other organizations and enterprise federations, which foresee an internal demand growth between 11 and 31% until 2018, due to the Malaysian investment projects and development of the Country's infra-structures.

Even considering some of the difficulties referred, it is correct to say that the Malaysian entrepreneurs would rather acquire this raw material from national producers, since that would be the better way to avoid international fluctuations in prices, as well as the exchange balance in international business. The country also has free-trade agreements for international business in place with over half of the world countries. Besides, it has a rather important geographic location for the international trade routes.

China, Japan and USA Lead the Market

The Chinese where the first to combine iron and carbon to produce steel, in the I Century b.C., however only in the last twenty years have they gained the status as the top world producer. The second biggest producer of this raw material in the world ranking is Japan, with more than 110 billion tons produced in 2014. The interest of the Japanese in this material emerged in 1958, with the construction of the observation and communication Tokyo Tower, in which one third of the steel used was scrap metal from more than 90 United States tanks shot down in the Korean War. In third place, with over 88 billion tons, are the USA. In 1943, due to the country's involvement in the Second World War, the USA produced over one billion coins in steel, because copper was to be used exclusively in the war effort. 

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