Malaysian ferrous scrap export tax looming

Nation’s trade ministry reportedly planning a 15 percent export duty on ferrous scrap and will restrict traders from importing scrap.

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January 21, 2021

The Ministry of International Trade and Industry (MITI) of Malaysia has reportedly formulated policies designed to protect its domestic steelmakers, with one of those being a 15 percent duty placed on ferrous scrap exports.

An item posted to the website of the South East Asia Iron and Steel Institute (SEAISI), which it attributes to London-based Kallanish, says the export duty is one of six planned measures listed by MITI in a letter to steel companies. Kallanish cites Malaysia-based business publication The Edge for first reporting on the letter.

The promised 2021 policies also include import duties on finished and semi-finished steel and rules that will make it harder for new steel mill capacity to be added in Malaysia.

The scrap-related rules also affect the import side of the business. According to the item posted by SEAISI, MITI is promising to “impose stricter standards on issuing licenses for scrap processors, and would only allow consumers to import scrap, not traders.”

The article indicates MITI may be siding with existing steelmakers who are concerned about overcapacity, caused in part by plans for Chinese state-owned enterprise funding of a 5-to-10 million-tons-per-year new integrated steelmaking complex in Samalaju, Malaysia, on the island of Borneo. Another 3 million tons per year integrated complex is under construction by Malaysia-based Megasteel, says Kallanish.