“Malaysia’s steel consumption is projected to rise to 8.3-9 million tonnes in 2024, driven by data centers and semiconductor industry growth, says Misif.”
Kuala Lumpur, 02nd July 2024, 12.15pm – After three consecutive years of growth, domestic steel consumption is projected to increase further this year, reaching between 8.3 million and nine million tonnes, according to the Malaysian Iron and Steel Industry Federation (Misif).
Misif president Datuk Lim Hong Thye stated that the demand for steel will primarily be fueled by investments in data centers and the expansion of the semiconductor industry.
“We anticipate positive growth in steel consumption this year, with an expected rise to 8.3 million tonnes, driven mainly by data center construction. If infrastructure projects like the Penang light rail transit commence, steel demand could approach nine million tonnes,” Lim said at a press conference following the launch of the federation’s report on the status and outlook of the local iron and steel industry on Monday.
Tech giants like Google have previously announced plans to invest US$2 billion (RM9.4 billion) to establish the first Google data center and Google Cloud region in Malaysia.
Malaysia’s steel consumption, measured by apparent steel consumption (ASC), dropped 26% to 6.8 million tonnes in 2020 from 9.2 million tonnes in 2019. However, it rebounded to seven million tonnes in 2021, 7.5 million tonnes in 2022, and 7.9 million tonnes in 2023, driven by a steady recovery in the construction sector.
In 2023, domestic crude steel production surpassed pre-pandemic levels, reaching 7.5 million tonnes, a 4.5% increase from 7.2 million tonnes in 2022, and an 8.7% rise from the 6.9 million tonnes produced in 2019.
Iron and steel imports grew by 17.3% to 7.3 million tonnes in 2023, up from 6.2 million tonnes in 2022. China remains Malaysia’s largest source of imports, accounting for 27.9% of total imports, followed by Taiwan, Vietnam, Japan, and South Korea.
Exports of iron and steel increased by 14.5% in 2023, reaching 8.2 million tonnes compared to 7.2 million tonnes in 2022.
However, Lim noted that the local steel industry remains challenging due to overcapacity issues, resulting in low capacity utilization, which averaged 39.1% last year—significantly lower than the global average of 75.7%.
Lim explained that the overcapacity issue affects not only Malaysia but also the entire ASEAN region, as China exports its surplus production capacity.
“We are urging the government to help us combat these unfair imports. This problem isn’t limited to China, as their steel mills operate in other countries too. We’ve discussed this with the government and are awaiting their directive,” Lim stated.
Additionally, Lim mentioned that Misif hopes the government will offer incentives to encourage steel mills to advance up the value chain.
This can be achieved by attracting foreign steel manufacturers to invest in products not currently produced locally, facilitating knowledge transfer, and benefiting the domestic steel industry.
Presently, locally produced steel products are primarily used in the construction sector.
