According to its group managing director Datuk Lim Hong Thye, higher steel demand in Malaysia would be driven mainly by the full rollout of several big infrastructure and property projects. Ann Joo Resources is Malaysia
KUALA LUMPUR: Malaysian steel and aluminium producers will only sustain a low impact from the US's decision to impose tariff on steel and aluminium, says AmBank Research.
It said on Friday the impact on Malaysia is low as exports to the US is about 100,000 tonnes of steel or around 0.3% of all the steel products to the country.
Of the 17 Malaysian companies, Tatt Giap Group has the largest exposure at 6.7%. It manufactures, imports, wholesales and retails stainless steel and steel products. The company produces stainless steel tubes and pipes, coils and perforated metal products.
According to AmBank Research the other companies are Ann Joo
Resources, Lion Industries Corp, Hiap Teck Venture, CSC Steel Holdings, Malaysia Steel Works KL, Choo Bee Metal Industries, Leon Fuat.
They include Atta Global Group, Lysaght Galvanized Steel, Mycron Steel, YKGI Holdings, Eonmetall Group, Chuan Huat Resources, Leader Steel Holdings, Amalgamated Industrial Steel and Melewar Industrial Group.
It said the US has decided to impose tariffs on steel and aluminum on the EU, Canada and Mexico, thus ending the temporary exemptions.
A 25% tariff on steel imports and a 10% tariff on aluminium imports would effective June 1. Though the move drew criticism from congressional Republicans, business groups and US allies, the US president still favoured the “America First” agenda as promised during his US presidency campaign.
AmResearch said the argument on imposing the tariffs is to protect the US steel industry from foreign competition.
The aim is to reduce US total imports of all steel products by 13.3mil metric tonnes or 37% of the estimated 2017 amount to 22.6 million tonnes.
It said the US decision to impose tariff on steel and aluminium by 25% and 10% respectively on Canada, Mexico and the EU was poised to trigger trade retaliation.
“Our focus will now be on China, which the US has indicated a 25% tariff on US$50bil of Chinese goods containing industrially significant technology,” it said.
AmResearch said its focus will also be on the US direction on North American Free Trade Area (Nafta).
The risk of the US adopting a more drastic move of withdrawing from Nafta or imposing new tariffs on imported cars cannot be ruled out.
Should that happen, the prospects for a near-term NAFTA deal will be seen fading.
The research house expects global markets to remain in a volatile mode in the near term.
Apart from the trade war issues, the market will also be focusing on the coming FOMC meeting in June which the research house expects the Fed to raise rates by another 25bps.
More importantly, it will be the tone of the Fed that will determine its policy rate hike aggressiveness. Also, the Italian crisis will continue to remain on the radar.
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