Steel industry players blame China for excess capacity

2026-03-24 - 00:50

The surge in China’s steel exports has put pressure on prices of the commodity across many regions, including Southeast Asia. (Bernama pic) PETALING JAYA: The Malaysian steel industry has singled out China’s rapid expansion in the sector as one of the causes of excess manufacturing that has led to a probe by the US government. The Malaysian Iron and Steel Industry Federation (Misif) noted that steel exports from China amounted to 119 million tonnes last year, the highest since 2015. “This surge has contributed to heightened competitive price pressures across many regions, including Southeast Asia,” Misif president Roshan M Abdullah told FMT. However, Roshan said, Malaysia’s steel exports to the US remains “relatively modest”. He said the increase in US tariffs from 25% to 50% in June 2025 had affected the competitiveness of Malaysian steel exports to the US market. Nonetheless, he also cited other reasons for the trade imbalance in the steel industry. For instance, he said, economic downturns and government interventions can also contribute to the disparity. Last week, the US government launched a probe into Malaysia and 14 other countries over “structural excess capacity and production” in the manufacturing sector. Apart from steel, Washington is also looking into allegations of excess capacity in the electronics and machinery sectors with a view to reinstating tariffs struck down by the US Supreme Court. Investment, trade and industry minister Johari Ghani said Malaysia will provide the US with an explanation, adding that even if the country has excess production capacity, it does not mean it is dumping its products. Separately, the Malaysia Semiconductor Industry Association (MSIA) said any reference to excess manufacturing in the US investigation should be interpreted cautiously in Malaysia’s case. Its president, Wong Siew Hai, said Malaysia’s semiconductor and electrical and electronics (E&E) industries are integrated into the global supply chain, with production driven by multinational companies (MNCs) serving global demand rather than state-led capacity expansion. In the E&E sector specifically, Wong said, the manufacturing load for most MNCs is centrally planned at their headquarters based on demand or orders. “At this stage, there is no clear evidence that Malaysia’s semiconductor sector has structural overcapacity,” he said. Nonetheless, he added, the US probe would create some uncertainty for exporters. Both Misif and MSIA called for Malaysia to engage constructively with US authorities and provide transparent information on production, capacity and trade flows. “We believe that ongoing dialogue and transparency will help ensure Malaysia’s steel industry is fairly and accurately represented in any trade review process,” Roshan said. Meanwhile, Wong said the semiconductor industry must also maintain competitiveness and compliance with international trade standards to safeguard its position in the global supply chain.