This article first appeared in The Edge Malaysia Weekly on December 11, 2023 - December 17, 2023

THE move last week by two local cold rolled coil (CRC) producers — Mycron Steel Bhd and CSC Steel Holdings Bhd — to obtain a judicial review as well as a stay on the Ministry of Investment, Trade and Industry’s (Miti) decision to terminate anti-dumping duty on CRC imports from South Korea and Vietnam questions the due process of the Trade Practice Section (TPS) in Miti.

In a nutshell, Miti, or more precisely the TPS, now has to justify how it reached the conclusion to have an Administrative Review of the anti-dumping duties imposed on South Korea and Vietnam initially, and why it sought to reverse the earlier decision.

For clarity, an Administrative Review puts an end to the imposition of anti-dumping duties and is generally sought in two cases: when the circumstances change so much that they affect the dumping margin or amount of subsidy; or when it is deemed no longer necessary for the anti-dumping duties to be maintained.

Asked to comment, in a brief phone message, Deputy Minister of Investment, Trade and Industry Liew Chin Tong tells The Edge, “I am not in the position to comment on this, unfortunately; I am not fully briefed on this case. Plus [the matter is] already in the courts.”

Mycron CEO Roshan M Abdullah says, “We look forward to the outcome of the judicial process.” He declined to say more.

Briefly, the steel business can be divided into two segments — flat steel, which involves the production of CRC from hot rolled coils (HRC); and long steel used mainly in construction. CRC is the raw material used in the manufacturing of automobiles, electrical appliances and other such products.

Interestingly, while Mycron and CSC were applying for leave to institute a judicial review and a stay of proceedings against Miti’s decision, in September this year Mexico’s Foreign Trade Enforcement Agency, which is under its ministry of economy, imposed duties on CRC imported from Vietnam. The quantum was between 12.77% and 81.06%. It is worth noting that the quantum of duties imposed represents the discount that the CRC from the offending country is being sold at in the country imposing the duty.

Other countries that have imposed import duties on Vietnamese CRC and related products include Pakistan, Canada and Indonesia, at 12.3% to 99.2%.

Malaysia’s duty on Vietnamese CRC was 7.42% to 33.7% for CRC of less than 1,300mm in width and 7.7% to 20.13% on at least 1,300mm in width. 

Countries such as China, Taiwan, South Korea, Venezuela, Argentina, Brazil and Turkiye have already imposed anti-third country circumvention measures on steel products from Vietnam. Anti-third country circumvention is the act of changing the origin or specification of a particular product to avoid trade remedies such as anti-dumping duties, which reduce the effectiveness of these measures.

In July 2019, the US Department of Commerce levied duties of more than 400% on steel imports from Vietnam, suggesting that the country was being used to evade the imposition of duties, for products from South Korea and Taiwan.

In Malaysia, many were also surprised that Miti and the TPS went so far as to expand the scope of the Administrative Review, which was sought from only a single producer of CRC in Vietnam for the review for CRC of below 1,300mm in width, to all CRC manufacturers in Vietnam, and also those producing CRC above 1,300mm, and even from South Korea.

One CRC producer from Vietnam had sought to get exemptions from anti-dumping duties for CRC of below 1,300mm in width, but Miti went ahead and expanded the review to include CRC from South Korea and CRC of above or equal to 1,300mm in width.

One industry player asks, “What is the economic benefit for foreign companies that export goods into Malaysia? Both Mycron and CSC Steel pay tax, their executives pay tax. Both Mycron and CSC Steel spur our economy, use Malaysian raw materials, pay high electricity tariffs, high gas tariffs, use Malaysian logistics companies, hire Malaysians. And it’s a long list, actually, on the virtues of the two … and Mycron is even a bumiputera company.”

Other than NS Bluescope Malaysia Sdn Bhd, which produces CRC for its own use, Mycron and CSC Steel are the only two remaining CRC manufacturers in the country.

CSC Steel is 46.3%-controlled by China Steel Asia Pacific Holdings Pte Ltd, a unit of China Steel Corp, while Mycron is 74.15%-controlled by businessman Tunku Datuk Yaacob Khyra.

Last Friday, Mycron shares ended trading at 35.5 sen, translating into a market capitalisation of RM116.1 million.

CSC Steel shares closed last Friday at RM1.20, valuing the company at RM443.2 million.

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