The company had closed down its operations in October 2015 order due to depressed market prices, soft demand for steel slabs, as well as the increased volatility of foreign exchange rates.
ESBB is a joint-venture company between Malaysia’s Hiap Teck Venture Bhd, Orient Steel Investment Pte Ltd and Chinaco Investment Pte Ltd.
Eastern Steel is principally involved in the manufacturing, selling and dealing of a range of steel products using the blast furnace plant, with a current production capacity of 700,000 tonnes of steel slabs per year.
Its products are targeted to be sold locally to satisfy domestic demand and also exported to neighbouring countries, principally Indonesia and Thailand, which are net importers of steel slabs.
Change in ESBB`s ownership to support its turnaround
In April 2018, the majority holder of ESBB, Hiap Teck Venture Bhd which is also Malaysia’s leading pipe manufacturer has proposed to dispose of a 20% stake in ESBB to China’s Jialong Industry Co Ltd for RMB 139.3million (USD 20.55 million) to find a new strategic partner that can help in turnaround of ESBB.
Following the change in ESBB’s corporate strategy, one of its shareholder, Orient Steel has decided to make an exit from this venture. Upon the completion of the disposals, Jianlong will hold a 60% stake in ESSB whereas Hiap Teck’s stake will be reduced to just 35%, Chinaco will maintain its 5% stake and Orient will no longer be a shareholder of ESBB.
As per the market sources, the proposed disposal represent an opportunity for Hiap Teck to partner with an established and experienced steel player, namely, Jianlong who can bring value in terms of capital, technical expertise and resources that can support ESSB in its resumption of production and to further expand its steel business.
Jianlong is a subsidiary of Beijing Jianlong Heavy Industry Group Co Ltd and has an annual capacity of 6 MnT. Beijing Jianlong is a major steel producer in China with a total annual production capacity of 24 MnT.
Hiap Teck Group’s board is confident that the resumption of ESBB operations will contribute positively to the future performance of the group.
Malaysia`s steel trade
Malaysia is a net importer of steel with imports of about 7.6 MnT of steel in 2017. Between 2009 and 2017, Malaysia’s imports increased by 99% over the same period, Malaysia’s steel exports gradually declined by 42%. The country majorly imports steel from China, Japan, Taiwan, South Korea and India.
In 2017, out of the total steel imports, flat products import accounted for 54% with a total of 4.1 MnT followed by long products 26% (2 MnT) and pipes/tubes at 9% (722 thousand metric tonnes) of the total import share.
As per the industry reports, the outlook for steel sector demand in the country for 2018 is quite positive. The higher steel demand in Malaysia would be driven mainly by the full rollout of several big infrastructure and property projects.