Ceiling price for steel abolished

The government has agreed to abolish the ceiling price of steel beginning next week.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said the cabinet made the decision in view of numerous complaints about the high price of steel, particularly billets and steel bars and difficulties in getting supply at the ceiling price.

Abdullah said the world price for steel was much higher than the local market. This affected the country’s construction industry and could also slow the implementation of development projects.

The government thus agreed to adopt three liberalisation measures.

Abdullah said the cabinet agreed to scrap the ceiling price to enable contractors for government projects to apply for changes in the contract price based on the market price for steel.

The government also agreed to exempt steel importers from applying for import licences. They would then be exempted from paying import duties.

Abdullah also said local steel producers or entrepreneurs can now export their steel-based products.

The steel products involved are billets (7207 11 900, 7207 12 900, 7207 19 900, 7207 20 910, 7207 20 990) and steel bars (7214 10 110, 7214 20 910).

He said the measures were in line with the government’s aim to make sure national development would take place as planned.

These would also make the market for steel-based products more efficient and transparent.

The measures will take effect on Monday.

Diversified steel group Ann Joo Resources Bhd executive director Datuk Lim Hong Thye welcomed the move.

“When the market is opened, it will be a fair game to all, whether steel millers or contractors,” he said, adding that there should also be a mechanism to ensure that only quality steel was imported into the country.

Stock analysts said the move was positive for the steel sector as well as those in construction and property development.

It should promote market efficiency and transparency.

“There will be less ambiguity in steel prices, which is important for small contractors when they bid for contracts,” an analyst from AmResearch said.

“Without clarity in steel prices, contractors will lack confidence when pricing their bids.” Most steel stocks rose yesterday ahead of the announcement as several ministers had signalled the move in the past weeks.

Southern Steel gained 3.7 per cent to RM3.06 on Bursa Malaysia yesterday, while Malaysia Steel Works added 2.3 per cent to RM1.78.

Meanwhile, shares of Ann Joo Resources rose 1.6 per cent to RM3.82.

By New Straits Times (by Hamidah Atan and Chong Pui Koon)