Malaysia Metals Report Q3 2010: New research report available at Fast Market Research

July 11, 2010 - PRLog -- Chinese over-capacity represents the most serious threat to Malaysian steel and aluminium production, with the China-ASEAN free trade agreement (FTA) raising concerns that Chinese producers will saturate the regional market and push down prices and undermine recovery, according to this latest Malaysia Metals Report from BMI.

BMI forecasts that steel production will reach 5.65mn tonnes in 2010, representing an increase of 13.4% year-on-year (y-o-y), compared with our 2009 estimate of a 22.5% contraction. However, the sustainability of recovery may be dependent on the government's economic stimulus packages giving further momentum to the construction sector, according to steelmakers. The steel industry is likely to remain strongly pro-cyclical. As well as the rise in crude steel output in 2010, hot rolled production will increase 14.1% to 4.64mn tonnes. However, this only partly offsets the 22.5% drop in crude and 26.8% drop in hot rolled output seen in 2009 and it will be 2014 before the industry recovers to pre-recession levels, due to an expected glut in regional markets and slower rates of domestic demand.

One of the main risk factors facing the Malaysian steel industry is the free trade agreement (FTA) between China and the ASEAN, which should definitely lead to a change in trade dynamics for steel and aluminium in this region. The FTA will reinforce China's growing pull on South East Asia's export community, with Chinese demand in 2009 crucial to ASEAN's export recovery. On the upside, finished product output should be stimulated by access to the Chinese market. On the downside, increased trade openness with China brings greater competition, especially in low-cost manufacturing, and Malaysian producers will need to maintain competitiveness and boost investment in high-end manufacturing and product specialisation in order to sustain growth. Chinese steel demand will hold up due to the ongoing processes of industrialisation and urbanisation, but the pace of growth will be slower over the medium term. However, the market is in danger of short-term saturation with capacities growing at a faster rate than the market can absorb. A similar situation exists in the production of aluminium.

There is better news on the domestic front. The situation affecting the automotive industry is improving, with output up 25.5% y-o-y in Q110. Both domestic and external markets will help encourage growth in car production, bolstering flats output. The main concern facing the steel sector is the trend in construction, which will be a major determinant of longs production. The construction sector is vital to the recovery of the Malaysian steel market as it represents 71% of the country's steel consumption. BMI continues to offer a bleak outlook for construction sector growth and we estimate that Malaysia's construction industry contracted by 4.5% in 2009. For 2010, the prospects remain bleak. Although we expect an economic recovery, this recovery will likely be anaemic. Moreover, given fiscal constraints/ problems in public spending execution, the construction sector will lag the overall recovery. BMI predicts that construction output will contract by a further 0.4% in 2010 and struggle to move back into positive real growth during the remainder of our forecast period.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/71685_malaysia_metals_report_q...

Report Table of Contents:

Executive Summary
SWOT Analysis
- Malaysia Political SWOT
- Malaysia Economic SWOT
- Malaysia Business Environment SWOT
Global Overview
- Metals Market Overview
- Table: World's Top 10 Steel Producing Countries (mn tonnes)
- Table: Recently Added And Planned Smelter Capacity
- Commodities Forecast - Nickel To Average US$22,000/tonne In 2010
- Table: BMI Nickel Forecast
- Table: Nickel
- Market Strategy - Aluminium Update: Downside Risks To Average Price of US$2,100/tonne In 2010
- Table: BMI Aluminium Forecast
- Table: Aluminium
- Commodities Forecast - Gold To Average US$1,150/oz In 2010
- Table: BMI Gold Forecast
- Table: Gold
- Commodities Forecast - Copper
- Table: BMI Copper Forecast
- Table: Copper
Regional Overview
- Table: Top 10 Asian Steel Producers, 2008
Forecast Scenario
- Table: Malaysia's Metal Industry 2007-2014 ('000 tonnes unless stated)
- Macroeconomic Forecasts
- Table: Malaysia - Economic Activity
Competitive Landscape
Company Profiles
- Perwaja Steel
- Lion Group
Global Assumptions - Q3 2010 Update
- Table: Global & Regional Real Gdp Growth (%)
- Table: Real Gdp Growth (%) - Consensus Forecasts
- Table: Global Assumptions
- Table: Developed States, Real Gdp Growth Forecasts
- Table: Emerging Markets Aggregate Growth
Country Snapshot: Malaysia Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2000-2003
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Manufacturing Wages, 2000-2012
BMI Methodology
- How We Generate Our Industry Forecasts
- Cross Checks

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