The Malaysian steel industry may not win the capacity game, but that is not as disadvantageous as it would seem

Unlike most steel industries around the world, the Malaysian steel industry seemed to have “bypassed” blast oxygen furnaces (“BOF”) right from the start. Historically, production of crude steel has been delivered solely through electric arc furnaces (“EAF”), which totaled 3.2 million metric tonnes in 2017. While EAFs may not yield the same economies of scale enjoyed by their BOF cousins, their smaller production outputs and better operational flexibility may not necessarily be disadvantageous in the present global steel climate—one that is struggling with overcapacity—particularly if the industry is moving towards production of complex and specialist steel. In fact, the industry’s setup may be better suited to meet such demands from future Malaysian manufacturers. Such a future is certainly viable because while the demand for complex and specialist steel may be lower in volume compared to low cost steel, they are significantly much more valuable.

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