PETALING JAYA: Ann Joo Resources Bhd is seeking the intervention of theInternational Trade and Industry Ministry (Miti) to prevent what it describes as dumping activities by steel millers from China.
Although Miti has imposed a 25% import duty on steel from China, Taiwan, South Korea and Indonesia, Ann Joo group managing director Datuk Lim Hong Thye said that some Chinese players were circumventing the system by declaring their exports into Malaysia as alloy instead of steel.
“These companies are taking advantage of the loophole in the China tax structure, artificially inducing an export rebate of 9%-13%. Other domestic steel mill players, who we cannot name at this point, are joining us in this petition to Miti before the end of June for more stringent guidelines,” Lim told the press after the company’s AGM.
“We are asking for a trade remedy rather than trade protection.”
Ann Joo operates in two segments – iron and steel, which are used in the manufacturing and trading of hardware, steel and iron products, and building and construction materials.
Miti will have 120 days to come up with provisional anti-dumping duties, following Ann Joo’s application, which is to be submitted in June.
Steel imports had risen from 14,000 tonnes in 2011 to 54,000 tonnes last year, Lim said, a worrying illustration of the global over-capacity of about 200 million tonnes of steel a year.
In the past few years, a large portion of Ann Joo’s RM18mil capital expenditure had been invested in blast furnace operations, which was introduced to induce energy savings on the steel manufacturer’s billet production.
Lim said the integration of its iron and steel productions, which took a year-and-a-half to smoothen out, improved productivity and effectively lowered electricity consumption to mitigate against the hikes in electricity and natural gas tariffs effective Jan 1 and May 1, respectively.
“Substantial savings there have strengthened profitability,” Lim said.
For the first quarter ended March 31, 2014, Ann Joo posted a net profit of RM12.5mil, up 28.5% from RM9.73mil in the previous corresponding quarter.
Revenue came in at RM686mil, up 38.44% from RM495.5mil a year ago.
Net profit for the financial year 2013 was RM12.27mil, improving 165% from a net loss of RM18.87mil the year before.
Revenue was RM2.16bil compared to RM2.11bil in the previous year.
“An improved cost structure has helped to improve profits and mitigate against foreign exchange losses of RM25.81mil and depressed steel prices due to the artificially cheap Chinese steel products,” Lim said.
“But we are feeling the pressure, as steel bar pricing in Malaysia fell 6% last year. Our main product – steel bars and wire rods – are currently priced at RM2,000 per tonne. If the dumping continues, then it would fall below the RM2,000 threshold.”
Source – thestar