Southeast Asia's flat steel trade is increasingly driven by policy factors. Beyond prices and freight costs, anti-dumping duties, anti-circumvention measures, and certification requirements are also reshaping market access conditions. Malaysia clearly exemplifies this shift: on the one hand, it is strengthening protection for domestic producers of cold-rolled coil and coated steel; on the other, it remains reliant on imports of hot-rolled coil, special steel grades, and specific specifications that local mills cannot yet adequately supply. Consequently, Malaysia's import market is becoming more selective, with purchasing decisions increasingly depending on product application scope, origin, the tariff treatment applicable to exporters, and downstream user demand.
Positioning of Malaysia in Southeast Asia's Steel Trade Protection Landscape
Source: SMM
In Southeast Asia, countries have adopted various forms of steel trade protection measures based on their industrial structures, domestic capacity, and degree of import dependence. As its flat steel capacity expands, Vietnam has adopted more robust trade remedy measures; Indonesia continues to protect strategically significant domestic producers through a combination of tariffs and state-supported industrial policies. Meanwhile, Thailand focuses on cracking down on behaviors that circumvent trade measures by adding alloy elements or reclassifying steel.
Malaysia's position is more balanced. Unlike markets with a larger upstream production base, Malaysia still depends on imports for certain flat steel products, special steel grades, and technical specifications. Therefore, its policy approach is more selective: it protects products for which domestic supply capability already exists, while continuing to allow imports necessary for downstream manufacturing to enter the market.
Malaysia thus becomes an important case study for evaluating whether trade protection can strengthen domestic steel production capacity without significantly raising costs for pipe factories, steel service centers, processing and fabrication enterprises, and other steel-consuming industries.
Malaysia's Import Positioning and Supply-Demand Balance
Source: SMM
Malaysia's import structure reflects an uneven domestic steel industrial coverage. Although the country has sizable steel capacity, domestic production remains concentrated mainly in certain long products and common commercial-grade steel, while imported materials continue to play an important role in flat steel and semi-finished product raw materials.
From 2020 to 2025, hot-rolled coil consistently remained the largest identifiable category of steel imports for Malaysia, accounting for about 30% of total steel product imports. Coated steel, cold-rolled coil, and wire rod also held significant shares, while rebar imports stayed consistently below 1% over the six-year period. This indicates that Malaysia has a relatively stronger domestic supply capability in construction rebar, but remains more dependent on overseas supply for flat products and some upstream raw materials.
In 2025, Malaysia's import product mix also underwent notable changes. The share of hot-rolled coil fell from about 31% in 2024 to around 24%, while the share of steel billet imports surged to over 12% of total steel product imports. This shows that Malaysia's import dependence is not limited to finished flat products; when local supply, prices, or production and operating conditions change, its reliance on semi-finished materials may also increase.
These structural gaps explain why Malaysia's trade protection measures remain predominantly selective rather than imposing blanket restrictions. Measures targeting specific products and origins may help support domestic producers, but broader import restrictions could raise costs for downstream manufacturing enterprises that still rely on imported raw materials.
Malaysia's Existing Steel Anti-Dumping Measures and Review Status
Selected Measures in Place as of July 2026
Source: World Trade Organization
The coverage of Malaysia's anti-dumping measures is uneven, because its domestic steel industry has varying levels of development across different segments of the value chain. The country has a relatively well-established downstream flat products industry, including cold rolling, galvanizing, color coating, tinplate, and stainless steel processing. These producers rely on imported or locally sourced upstream raw materials, while also competing directly with imported finished and semi-finished flat products.
This also explains why Malaysia's existing trade remedy measures are concentrated mainly on cold-rolled coil and higher value-added coated products. Imports of cold-rolled coil, galvanized sheet, color-coated coil, tinplate, and cold-rolled stainless steel directly compete with Malaysia's existing rolling and coating lines. When these products enter the market at low prices, not only upstream steel producers are affected, but also domestic processing enterprises that have already invested in high-value-added processing capacity.
Source: SMM
In contrast, Malaysia currently has not imposed final anti-dumping duties on hot-rolled coil. At one stage, Megasteel was Malaysia's only domestic hot-rolled coil producer, and its plant in Banting played a key role in the local flat products supply chain. Malaysia also previously imposed anti-dumping duties on hot-rolled coil from China and Indonesia. However, after consecutive years of losses, Megasteel ceased operations in 2016, and the previous anti-dumping measures on hot-rolled coil expired in 2019. Given the lack of a domestic hot-rolled coil producer at that time that could operate sustainably and meet market demand, maintaining broad protective measures on hot-rolled coil could have driven up raw material costs for cold-rolling mills, pipe factories, and steel service centers without providing local supply at a corresponding scale.
This historical supply gap made imported hot-rolled coil an indispensable raw material for Malaysia's downstream steel industry. Cold-rolling mills and coated steel producers need competitively priced coil, while pipe factories and steel service centers rely on imported hot-rolled coil to meet standard and specialized specification requirements. In such a market structure, imposing high trade barriers on hot-rolled coil could protect an idled or undersupplied upstream asset while undermining a much larger downstream user base.
With Eastern Steel's entry into domestic hot-rolled coil production, the situation has begun to change. Malaysia has now re-established an upstream flat products production base, reducing the previous sole reliance on Megasteel and import supply. However, the current policy environment has not yet shifted toward broad protection for hot-rolled coil, partly because the new capacity's commissioning time has been relatively short, and the market still needs to assess its product range, capacity utilization rate, and ability to consistently meet downstream demand. The Malaysian Investment Development Authority has also previously noted that the entry of new domestic flat product producers could have a significant impact on Malaysia's steel industry.
Steel billet, wire rod, and rebar currently face relatively limited trade protection as well, but for different reasons. Malaysia has several domestic long product producers, but the market has long struggled with overcapacity, low capacity utilization rates, and varying enterprise operating conditions. In these product segments, import competition is only part of the issue; domestic overcapacity, production costs, and weak demand also affect steel mills' performance. Hence, Malaysia's broader steel industry development roadmap emphasizes industry restructuring, capacity management, and the transition to higher-value-added products, rather than relying solely on trade remedy measures.
Are Malaysian Cold-Rolling Mills Purchasing More Hot-Rolled Coil?
However, in the actual market, current feedback suggests that the impact of relevant policies is being overshadowed by weak downstream demand. Market participants in Malaysia told SMM that hot-rolled coil procurement remains slow, mainly due to limited project activity and sluggish end-user orders, rather than changes in cold-rolled coil anti-dumping duties.
Therefore, trade protection alone is unlikely to drive a significant increase in hot-rolled coil procurement volume. Even if the competitiveness of imported cold-rolled coil declines, domestic cold-rolling mills are unlikely to substantially raise production until demand improves in construction, manufacturing, and other steel-consuming industries.
As the market gradually shifts toward local processing, Eastern Steel may still benefit; at the same time, imported hot-rolled coil remains important for maintaining price competition and covering diverse specification needs. However, in the short term, procurement is expected to remain cautious and driven by actual demand. Compared with trade protection policies, changes in downstream orders will have a more direct impact on procurement.
Regional Trade Diversion: Where Will Restricted Flat Products Flow?
Southeast Asia's Regional Trade Barriers and Import Dependence
Source: SMM
In 2025, China remained the largest supplier across the five major Southeast Asian steel markets, but the degree of reliance on Chinese supply varied significantly by country. Chinese steel accounted for about 48% of Malaysia's total steel imports, 56% of Vietnam's, 52% of Indonesia's, and over 81% of the Philippines'. Thailand's supply sources were more diversified, with Japan also holding a relatively high share apart from China.
This high concentration means that as regional trade barriers expand, the impact on Chinese exporters is the most pronounced. However, restrictions in one market do not mean that the affected shipments can automatically be redirected to another major Southeast Asian market. Vietnam continues to impose anti-dumping duties on Chinese hot-rolled coil; Thailand has expanded protective measures targeting the addition of alloying elements and the reclassification of hot-rolled coil; while Indonesia has implemented multiple measures on non-alloy and alloy flat products. Malaysia's restrictions are more concentrated on downstream cold-rolled coil and coated products.
The Philippines appears to be the most accessible large alternative market, but it is already highly dependent on Chinese supply, so additional diverted shipments are more likely to intensify market competition rather than generate substantial new demand. Thailand's more diversified import structure and existing hot-rolled coil measures also limit its ability to absorb more unrestricted supply. Meanwhile, Vietnam and Indonesia remain difficult to enter, as their domestic steel industries continue to expand and have adopted stronger upstream protection measures.
Consequently, exporters may need to adjust both destination and product strategies simultaneously. Suppliers of cold-rolled coil and coated steel facing higher duties may redirect limited volumes to the Philippines or smaller ASEAN markets; but they may also shift to hot-rolled coil, specialty steel grades, or products currently outside the scope of duty measures. Some suppliers may also increasingly turn to markets outside Southeast Asia.
SMM Outlook: Competition May Shift from Direct Imports to Localized Production
Sources: SMM, Southeast Asia Iron and Steel Institute (SEAISI), SteelOrbis, Hoa Sen Group
In the short term, Malaysia's flat products market is likely to remain constrained by weak demand. Market participants note that hot-rolled and cold-rolled coil procurement remains sluggish due to limited project activity and weak downstream orders. Tariffs on cold-rolled coil may support domestic cold-rolling mills, but until end-use consumption improves, they are not expected to drive significant growth in hot-rolled coil demand.
In the longer term, a more important shift may be the localization of steel production. Chinese-backed steel projects are expanding in Malaysia, Indonesia, Thailand, Vietnam, and the Philippines, covering products such as hot-rolled coil, coated steel, stainless steel, and long products. This indicates that Chinese enterprises' participation in Southeast Asian steel markets will increasingly extend from direct exports to local production, processing, and distribution.
For Malaysia, the proposed expansions involving Alliance Steel, Eastern Steel, and the Samalaju project could significantly strengthen domestic upstream capacity. If these projects progress smoothly, local buyers will gain easier access to domestically produced hot-rolled coil and other steel products in Malaysia. At the same time, the line between imported Chinese steel and Chinese-backed steel produced in Malaysia will become increasingly blurred.
This could reduce some of Malaysia's reliance on direct imports, but it could also intensify domestic market competition. New capacity will enter the market against a backdrop of uncertain demand growth, thereby raising the risk of oversupply and increasing price pressure on existing ASEAN producers.
Conclusion
Malaysia's flat products policy is becoming more selective rather than shifting to blanket restrictions. Tariffs on cold-rolled coil and coated steel may support the domestic processing industry, while the hot-rolled coil market remains relatively open to ensure that cold-rolling mills and other downstream users can access the raw materials they need. However, in the short term, weak project activity and sluggish end-user demand will remain the main factors limiting hot-rolled and cold-rolled coil consumption.
In the longer term, the expansion of Chinese-backed capacity in Southeast Asia could reshape the competitive landscape more profoundly than tariffs themselves. Trade barriers may reduce direct imports, but they are also driving production closer to end-user markets. As the regional steel industry becomes increasingly localized and policy-driven, Malaysia will need to strike a balance between attracting domestic investment, maintaining import flexibility, and safeguarding downstream competitiveness.
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