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

Malaysia has revised its iron and steel policies including an export duty on ferrous scrap, tighter issuance of new recycling licenses, and allowing manufacturing license holders to import metal scrap.


In December 2020, the Ministry of International Trade and Industry (MITI) outlined six-core provisions that were largely influenced by industry players in a document submitted in April 2019. The revisions will remain applicable until December 31, 2021, with further amendments or extensions subject to the New Industrial Master Plan 2021-2030 that is under development, MITI said in a statement. 


The provisions include tighter conditions to issue new manufacturing licenses, the extension of the current duty structure through 2021, export duty on ferrous scrap, options for import duty exemptions, stricter licensing of scrap metal recycling activities, and import allowances for ferrous scrap. 


The revisions for new manufacturing licenses for scrap processing are expected to protect existing manufacturers. For example, the amendments seek to address the business strategies of new companies like the Chinese Wenan steel project, which could absorb all the scrap metal at higher prices causing losses for local scrap dealers, MITI indicated. 


The extension of the current duty structure of 5-15pc on long and flats products has also been maintained to protect domestic manufacturers from lower-priced imports. Ferrous scrap will be subject to a 15pc export duty with an export license mechanism to assist domestic scrap consuming mills with raw material input inventories. 


Import duty exemptions or duty drawback for exports will be facilitated through licensed manufacturing warehouses and duty-free zones. 


Manufacturing license holders engaged in recycling activities are now allowed to import metal scrap including ferrous, copper, and aluminum. Traders, though, are not allowed to import metal scrap. 


Banking on “Buy Malaysia”

A “Buy Malaysia” awareness is encouraging steel players to purchase from local mills and domestic scrap manufacturers. Reports indicate that Lion Industries Corp Bhp (LICB), previously the owner of Megasteel, may build a 3mn mt annual capacity blast furnace under this initiative. 


Historically, China has been accused of dumping finished steel in Malaysia but with the growth in Chinese demand, Malaysia is establishing itself to both protect its domestic industry and be able to satisfy the growing demand in China for steel reports noted. Steel demand in China is expected to remain robust in 2021. 

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