Five-year shield for CRC players

THE government has extended anti-dumping duties on cold rolled coils (CRCs) of iron or non-alloy steel from China and Japan for five more years in a move to protect its domestic steel industry from unfair foreign competition.

The extension, from June 23, 2025, to June 22, 2030, is seen as a welcomed move as it will continue to be a buffer for local manufacturers whose margins have been squeezed by a flood of cheaper imports in recent years.

The Investment, Trade and Industry Ministry has decided to continue imposing anti-dumping duties on imports of CRC of iron or non-alloy steel (over 1,300 mm wide) from China and Japan, excluding those used for automotive and transformer finwall applications, or tin mill black plate.

The duties range from 4.76% to 8.74% for certain Chinese producers, and a hefty 26.39% for all Japanese producers and exporters.

In contrast, Malaysia has removed similar duties on CRC imports from South Korea and Vietnam, preserving some level of import competition and preventing full market closure.

How will this benefit the Bursa Malaysia-listed steel makers?

Public-listed CRC producers such as Mycron Steel Bhd and CSC Steel Holdings Bhd are widely expected to be the biggest beneficiaries of the protective shield.

Mycron, a pure-play CRC player, has long borne the brunt of razor-thin margins due to aggressive foreign competition, particularly from Chinese producers.

With the duties extension, Mycron may regain pricing power in the non-automotive CRC segment.

The protection will not only stabilise its earnings but also allow it to reclaim lost market share and increase production volumes.

CSC Steel, meanwhile, stands to benefit from the improved pricing environment, even though it has a more diversified product portfolio that includes hot rolled and galvanised steel.

With strong operational efficiency and a net cash position of RM347.7mil, it is well-positioned to leverage improved margins, even as its revenue base contracted 17.3% year-on-year (y-o-y) in the first quarter of 2025 amid soft demand.

The company’s adjusted net profit of RM14.8mil in the latest quarter, up 19.2% y-o-y, surprised analysts and led to upward revisions in earnings forecasts.

Revised assumptions now project earnings growth of 47.3% in financial year 2025, despite persistent macro headwinds.

While Hiap Teck Venture Bhd and Ann Joo Resources Bhd are more exposed to long and upstream steel products, the rebound in CRC prices is likely to have knock-on effects across the value chain. Improved price stability could lift sector sentiment, increase average selling prices or ASPs and encourage capacity utilisation across integrated operations.

This is particularly vital at a time when Malaysian steel exports have taken a hit, contracting 29.5% y-o-y, in the first five months of 2025.

Although iron and steel only accounted for 1.8% of total exports during this period, the decline could weigh on broader manufacturing output if left unchecked.

Moreover, the sector faces potential headwinds from abroad.

New US tariffs – set to double to 50% on certain steel and aluminium products starting in June, 2025 – could curb demand from Malaysia’s downstream players that supply steel-intensive goods like home appliances to the American market.

While the direct export exposure is under 5%, the broader ramifications on supply chains and sentiment cannot be ignored.

Protection with a caveat

While the extended anti-dumping duties offer breathing space, not all analysts are convinced of their long-term effectiveness.

Some question the clarity around what constitutes dumping and whether enforcement will be rigorous to stem illegal imports that continue to undermine pricing.

“The extension of the anti-dumping measure could be a near-term positive for downstream steel players like CSC Steel. That said, its effectiveness remains debatable, given the lack of a clear definition of ‘dumping’ and the challenge of proving market flooding,” an analyst tells StarBiz 7.

“While we welcome protective measures for domestic players, the lack of detail on the scope and execution makes it difficult to gauge its actual impact on easing competitive pressures.

“For now, we maintain a cautious view on the sector, especially amid the current soft demand for steel products,” the analyst says.

Essentially, unless there is better enforcement and stronger domestic demand, the duties alone won’t be a silver bullet.

The sluggish rollout of infrastructure projects and lacklustre demand from end markets further compound the uncertainty.

Without a clear pickup in local consumption, the sector’s recovery could remain shallow despite the protective tariffs.

For Malaysia’s steelmakers, the renewed duties are less a lifeline than a window – five years to restructure, invest in higher-value products, and increase competitiveness.

Temporary protectionist measures are no substitute for long-term competitiveness in an industry characterised by global overcapacity and small margins.

The key will be capitalising on this period to build operational resilience.

For example, investments in downstream steel processing, digitalisation of supply chains, or entry into niche markets such as electrical steel for electric vehicles and transformers could help Malaysian players insulate themselves from future external shocks.

Investors may cheer the immediate earnings uplift, particularly for CRC-focused players like Mycron and CSC Steel.

But the rally may be capped without a revival in domestic demand or major industry consolidation.

With valuations still modest and dividend yields attractive – CSC Steel, for instance, offers a projected 6.3% yield – selective positioning in the sector could offer tactical upside.

Still, unless the industry uses this five-year shield to fortify its foundations, Malaysia’s steel sector risks falling back into vulnerability once the duties expire.

As the saying goes: build while the sun shines. For local steelmakers, the clock is ticking.