OSK Research said that steel prices are expected to increase between 10% and 15% in the next few months on the resumption of private and public construction activities after the Chinese New Year celebrations.
It said that average selling prices of steel products escalated since December 2009, but the increase was mainly driven by the cost push element. It added that "We continue to think that with on going projects perhaps helping to sustain 70% of regular annual long steel consumption, the balance may be compensated if most public projects are executed in a timely manner."
OSK said that local steel mills have been exporting more than one million tonnes of steel products, annually, in the last two years. Malaysia's exports escalated after China imposed a 25% export tax on billets, creating a vacuum of 5 million tonnes of billets in the South East Asia market. China previously supplied 75% of the region's requirements.
It added that "Improvements in the economies of the Middle East, Australia, Pakistan and Bangladesh are also expected to be a boon to Malaysia's billet exports."