Malaysia sets ferrous scrap tariff at 15 percent

Nation’s steelmakers had been urging an export ban or restriction.

March 22, 2021

The Malaysian government reportedly has finalized its system to impose a 15 percent duty on ferrous scrap exports, enacting a policy favored by that nation’s steel industry.

A March 19 online news report by S&P Global Platts says a Malaysian government gazette entry on that day points to the March 25 enactment of the 15 percent duty on outbound shipments for scrap with the Harmonized System (HS) codes of 7204.10.0000, 7204.29.0000, 7204.30.0000, 7204.41.0000 and 7204.49.0000.

The Selangor, Malaysia-based South East Asia Iron and Steel Institute (SEAISI) has been expressing concern since at least October 2020 about additional steel capacity being added in the nation. The association fears downward finished steel price pressure accompanied by a scramble for raw materials.

“It will take about 20 years for demand to catch up with this [planned] capacity level,” SEAISI wrote in October about blast furnace/basic oxygen furnace (BOF) capacity being added in the nation.

The new BOF projects also will create additional competition for ferrous scrap supplies needed by Malaysia’s existing electric arc furnace (EAF) steelmakers.

With those projects likely to continue, the government has instead opted to disincentivize Malaysian traders from sending ferrous scrap overseas. According to S&P, traders in 2020 shipped some 450,000 tons of Malaysian ferrous scrap to nations such as India and Singapore.