Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Malaysian flat steel producer Lion Industries Corporation Bhd will start production of its flat products including hot rolled coils (HRC) under the ‘Megasteel project’ in 2021. By Q2 in 2021, the company will aim to produce around 2.5-3mn mt of flat products per annum. This will reduce the country’s dependence on HRC imports as it could offset imports worth RM13bn per year.  

Malaysia imports HRC mainly from the Southeast Asia and China. In 2019, HRC imports in Malaysia were recorded at 2.54mn mt, up 4.5pc from the prior year. The company plans to invest in a new blast furnace (BF) project to expand its capacity.  

In the first phase of expansion, it will invest of RM3bn ($470mn) which includes a 3,000 cubic meters BF, sinter plant, coke oven and two converters to add its existing three arc furnaces, ladle furnace and caster. The company is in negotiation with a Chinese investor steel group that could be the potential foreign partner for the BF project.


Rise in capacity 

Lion Industries said that after its expansion, the production capacity will be 5.5mn mt per annum of which 4.5mn mt will be used in the production of HRC and 1mn mt will be for manufacturing of high-grade polished shaft bars and wire rods.  

With other two subsidiaries, Amsteel Mills Sdn Bhd and Eden Flame Sdn Bhd (formerly Antara Steel Mills Johor) with an existing capacity of 1.2mn mt of steel bars and wire rods by, Lion Industries’ total steel output will be 6.7mn mt per annum from 2021 onwards.

Malaysian steel consumption has remained relatively unchanged at about 10-11mn mt per annum for the last 15 years, but is slated increase to 15mn mt per annum in the next five years, as per the Malaysian Steel Industry Association and SEAISI. 


Megasteel project’s challenges

Notably, in 2016, the steelmaker had stopped operations at its Megasteel project as it was unable to make profits with domestic sales against significantly cheaper imported HRC. High electricity prices added to overall costing of three electric arc furnaces. 


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