The Malaysian government has reimposed tighter pandemic restrictions from Jan 13 amid a resurgence of COVID-19 infections. States of Penang, Selangor, Melaka, Johor and Sabah along with three federal territories of Kuala Lumpur, Putrajaya and Labuan will be under a Movement Control Order (MCO) for two weeks till Jan 26. The government could allow the manufacturing and steel industries to operate under safety restrictions. However, interstate transport would be hampered.
Congestion at port Klang
Malaysian mills are wary of delays in receiving iron ore and ferrous scrap shipments booked in December and early January. The recovery of steel demand is also likely to be delayed due to new restrictions. Port Klang, Malaysia’s largest and busiest port, is facing severe congestion for the past few weeks, which is delaying the clearance of imports and disrupting logistics. Malaysia’s Transport Ministry has directed the Port Klang Authority (PKA) to clear the bottleneck at the port. The Department of Malaysian Quarantine Inspection Service (MAQIS) allocated additional manpower to conduct container inspections and release most of the blocked containers within a day. However, the situation will require combined efforts from shipping lines and the port authorities.
Ferrous scrap and iron ore importers were under pressure to pay additional transportation charges to get their orders on time. While domestic ferrous scrap prices rose in line with global cues and short supply. Mills might prefer domestic ferrous scrap over imported to avoid delays, said traders. Rising iron ore and scrap prices are expected to hurt Malaysian mills that export billets to Asian countries, especially China.