The Malaysian Iron and Steel Industry Federation (MISIF) has called on the Malaysian government to review its decision to increase electricity base tariffs from 39.95 sen/Kwh to 45.62 sen/Kwh despite repeated calls from the steel industry for more competitive electricity pricing, given the severe challenges faced by the sector and its ongoing efforts to decarbonize. The hike will be effective from July 1, 2025.
According to the statement, the Malaysian iron and steel industry has been grappling with substantial losses amounting to billions of Ringgit over the past three years, driven by the influx of cheap imports, rising raw material costs, stringent environmental regulations, and the lingering effects of the sharp increases in electricity and natural gas tariffs that took effect on January 1, 2023. Expressing that the electricity required to produce just one tonne of steel amounts to as much as 650 kWh, MISIF noted that electricity will play a critical role in transitioning to more sustainable steelmaking practices, which are expected to significantly increase the country's electricity demand.
MISIF said, “Any further increases in electricity tariffs will place additional strain on the industry, where energy costs are the second-largest expense after raw materials. Higher electricity prices will erode the competitiveness of local producers, further inflating production costs, which will ultimately be passed on to consumers.”