Malaysian government plans to address excess capacity in the region

The Malaysian government plans to work with China and Southeast Asian authorities to address overcapacity in the steel industry.

“The problem [in the steel industry] is overcapacity. I hope that the Malaysian steel industry, together with the government, can have more dialogue and also work more collaboratively towards cooperation. We hope that we can work with China and also engage with ASEAN countries to address the issue of excess capacity in Southeast Asia,” Deputy Minister of Investment, Trade and Industry (Malaysia) Liew Chin Tong told reporters on the sidelines. Trade Forum of the Malaysian Iron and Steel Federation (MISIF).

However, he did not specify the timing of interaction, noting only that the ministry “will work on it.” He also stresses that he hopes to solve this problem through joint efforts rather than restricting Chinese investment in Malaysia's steel industry.

He also notes that China's experience is something that industry players and authorities can share as the Chinese government has successfully addressed the problem of excess capacity by taking up to 150 million tons of capacity per year from the steel industry.

It noted that the Southeast Asian Iron and Steel Institute (SEAISI) continues to observe looming unsustainable overcapacity in the ASEAN-6 countries of Vietnam, Thailand, Singapore, the Philippines, Malaysia and Indonesia.

SEAISI Secretary-General Yeoh Wee Jin told the forum that he expects the new 71.9 million tonne per annum integrated plant capacity and the new 4.7 million tonne per annum arc furnace capacity in ASEAN to lead to excess capacity in the region in the next few years.

“If all the integrated plants come online, there would be more than 70 tonnes [per year] of steel coming into ASEAN from all the potential integrated plants,” he says, adding that potential overcapacity would lead to industry losses.

According to him, ASEAN's existing steel production capacity is 75.3 million tons per year. This includes steel production capacity of 23.2 million tons per year in Vietnam, 13.8 million tons per year in Thailand, 16.1 million tons per year in Malaysia, 0.8 million tons per year in Singapore, 18.5 million tons per year in Indonesia and 3 million tons per year in the Philippines.

He forecasts ASEAN's steel production capacity to reach 151.9 million tonnes per year. This will include a steelmaking capacity of 28.8 million tonnes per annum in Vietnam, 13.8 million tonnes per annum in Thailand, 48.9 million tonnes per annum in Malaysia, 0.8 million tonnes per annum in Singapore, 41.5 million tons per year in Indonesia and 18.2 million tons per year in the Philippines.