Malaysian steel industry representatives at an industry conference in Jakarta this week expressed the hope that the country's new cabinet, due to be sworn in soon, will continue to make infrastructure development a policy focus.
This was cast in doubt with the new prime minister Mahathir Mohamad saying that his government would review all Chinese projects and renegotiate "unequal treaties" as he described them.
"We're now awaiting the appointment of the new steel minister, and are cautiously optimistic that things will continue in an orderly manner," Frankie Wee, CEO of the Malaysian Iron & Steel Industry Federation, told the South East Asia Iron and Steel Institute conference Monday in Jakarta.
Wee told S&P Global Platts on the sidelines of the conference that the federation would "immediately engage with" the new minister for international trade and industry ministry, which oversees the steel industry, once the person is identified.
Lim Hong Thye, managing director of Ann Joo Steel, said he expected government spending on infrastructure to continue to be a key focus in driving the economy forward.
"There is a lot of talk of cancellations of projects, but the more likely scenario is that they're going to review projects," Lim said. "I personally feel the right thing is to review projects and make them more feasible and effective investment."
Of the Chinese investment in infrastructure in Malaysia, Wee said "the Belt and Road [Initiative] must benefit the nations and industries concerned." Critics of the projects have said that they don't use steel produced in Malaysia or employ Malaysian workers.
Even if development of some of the Chinese mega-projects are stalled as Malaysia's new cabinet comes to terms with them, Wee said there were several other developments across the country, including in the industrial and property sectors, that would keep steel demand afloat.
"Construction projects won't stop just like that," he said.
Apparent steel consumption in Malaysia in 2017 fell 7.9%, the second deepest fall after Thailand among the ASEAN-6 countries, to 9.4 million mt, due to a slowdown in construction activity, SEAISI data showed. Others that saw declines were Singapore and Vietnam, while that in Indonesia and the Philippines grew.
The relook at the country's infrastructure projects comes as a number of Malaysian steelmakers restarted shut plants as well as new capacity prior to the general election in May, which saw the Pakatan Harapan come to power.
These included Lion Group's Amsteel Mills EAF and billet casting line with a capacity of 660,000 mt/year in Banting, Selangor, and Antara Steel Mill's EAF and billet casting line with capacity of 700,000 mt/year in Pasir Gudang, Johor.
They also include Eastern Steel's slab casting capacity of 700,000 mt/year, and Alliance Steel's newly lit blast furnace, with billet casting capacity of 3.5 million mt/year.
The startups have mainly been attributed to higher steel prices in the domestic market, after the Malaysian government put in place safeguard measures that reduced imports of steel.
