KUALA LUMPUR (Nikkei Markets) -- Malaysia will impose anti-dumping duties on steel products to protect local manufacturers if the Southeast Asian country emerges as transhipment point amid an on-going trade war between the U.S. and China, the deputy minister for international trade and industry said Thursday.
"If there are transhipment activities, then there will be anti-dumping measures enacted against this," Ong Kian Ming said at a news conference. "My ministry is monitoring this and working closely with industry players on this."
Transhipment refers to diverting cargoes to different ports before shipping to the final destination, often in order to dodge tariff.
The comments come amid a tit-for-tat tariff war between the world's two largest economies that have raised risk of cheaper items being dumped across the globe.
Dumping occurs when a company charges more in its home market than in the export market for the same product.
"We are aware of the possibility of some countries using Malaysia as transhipment point amid the trade dispute," Ong said. "This will have detrimental effect on Malaysia."
The U.S. have imposed duties on some $250 billion worth of Chinese goods, while China have retaliated with $60 billion in import tariffs.
To beat the tariffs, some Chinese manufacturers have resorted to rerouting to low-cost Southeast Asian countries such as Vietnam before shipping the goods to the U.S, the Nikkei Asian Review reported earlier this month.
In February, Malaysia had imposed anti-dumping duties on cold-rolled stainless steel for five years until Feb. 7, 2023.
Still, there are "distortions" in distribution of steel products, said Lim Hong Thye, president of Malaysian Iron & Steel Industry Federation.
The government will continue to roll out measures to safeguard local players' interest, Ong said, while urging Malaysian steel makers to shift focus to speciality products catering to the automotive, oil and gas sectors from the construction segment as export prospects of such items are higher.
While the lingering Sino-U.S. trade dispute is unlikely to dent the demand-supply of steel, consumption of the metal is expected to rise 5-to-6% this year in Southeast Asia, Ong said.
"The average selling price (of steel products) is still relatively stable indicating that the recent trade conflict at this point in time has not significantly impacted the supply and demand of steel," Ong said. For China, he said steel production is likely to decrease 2% to 722.1 million tons in 2019 as compared to the estimated 736.8 million tons this year, as Chinese government is targeting to reduce steel output by 150 million tons by 2020.
--Gho Chee Yuan