Revision of steel bar prices in Malaysia pending for now

Revision of steel bar prices in Malaysia pending for now

Constantly surging raw material prices have hit steel bar supply in Malaysia. The ones in the steel industry, particularly contractors and builders, that are upset about the situation requested last month government intervention in terms of price revision in current ceiling price of steel bars. However, last week, government declared that ceiling price which is at RM 1'214/t (almost $320/t) level will remain firm until a study on effects of such revision in steel bar prices on the industry and consumers, as well as previously signed contracts, is completed. As steel products used in construction account 8% to 13% of cost, government is concerned that any price increase bringing up costs will affect low-cost housing. Several ministries are in charge for the study to be completed in 1-2 weeks and will then present their suggestions for the situation. There are various offers for a solution such as revoking restrictions in steel bar imports or revising ceiling price of subject material by RM 600/t ($158/t). The most agreed solution is to develop an “automatic price mechanism” which will adjust ceiling price of the material to current scrap prices. Scrap prices are now well over at $310-320/t levels (RM 1'178-1'216/t), up by 70-80% compared to six months ago. The latest revision in steel bar prices after 14 years in Malaysia was in April 2003 with an increase of RM 90/t. Under such circumstances, mills preferred not to produce and sell steel bars causing steel bar shortage in the country where monthly local demand is around 80'000-100'000 tons. Besides complaints claiming that steel mills focus on exports, no stockpiling has been reported. Moreover, Malaysian Iron and Steel Industry Federation (MISIF) stated that mills are still trying to meet the demand for steel bars from the local market. MISIF, representing integrated steel mills, reported that talks with the Ministry of Domestic Trade and Consumer Affairs will go on. Another meeting will be held before the end of this month. Furthermore, a meeting between integrated mills and the Ministry of International Trade and Industry will be held too. Accordingly, mills will have to effect their transactions at the current ceiling price for a definite period.