Mycron Steel Berhad | A pioneer in Cold Rolled Coils (CRC) and Steel Pipes

Chairman's Message

On behalf of the Board of Directors, I am pleased to present the Annual Report of Mycron Steel Berhad and its group of companies (“the Group” or “Mycron”) for the financial year ended 30 June 2021 (“FY2021”).


Mycron Steel Berhad encompasses the combined operations of two subsidiaries, namely Mycron Steel CRC Sdn Bhd (“MCRC”) and Melewar Steel Tube Sdn Bhd (“MST”).

MCRC is involved in the mid-stream sector of the steel industry, converting Hot Rolled Coil (“HRC”) steel sheets into thinner gauge Cold Rolled Coil (“CRC”) steel sheets. MST is involved in the down-stream sector, in the manufacture of Steel Tubes and Pipes (“Steel Tube”) which are made from HRC or CRC.


The COVID-19 pandemic has continued to domineer our lives throughout the first half of 2021, which carried a significant impact on the Group’s operations during the preceding financial year (FY2020). Despite the climate of uncertainty, the turnaround in the Group’s performance over the past year (FY2021) has proven steadfast and exceptional.

For the year under review, the Group performed strongly, with a total revenue of RM736.7 million compared to a total of RM596.1 million in the previous year, representing an increase of RM140.6 million or 23.6%.

The increase in revenue was due to higher sales volume and higher average unit selling price for both the CRC and Steel Tube divisions.

For FY2021, the Group’s total steel sales tonnage increased Exhibit 3: Sales Tonnage by Division by 18% to 267,218 tonnes (FY2020: 226,471 tonnes). Of this amount, CRC sales tonnage increased by 17% to 180,792 tonnes (FY2020: 154,348 tonnes) whilst Steel Tube sales tonnage increased by 20% to 86,426 tonnes (FY2020: 72,123 tonnes).


Despite the profitable performance for the year under review, the cash flow position of the Group is still considered to be tight, especially given the current record-high global HRC prices, which utilises a great amount of working capital. Moreover, banking facilities continue to be limited. The Directors, therefore, do not recommend the payment of any dividend for the financial year ended June 30, 2021.


The COVID-19 pandemic has caused the largest economic shock the global economy has witnessed in decades. Governments and societies, including those of Malaysia have been grappling between economic and public health priorities.

Historically, the steel industry has been highly cyclical. The industry is significantly affected by economic conditions as well as fluctuations in global production capacities, mainly due to the cyclical nature of the construction, machinery, equipment, transportation, and manufacturing industries, which are core consumers of steel products. The COVID-19 pandemic caused an unprecedented, sharp decline in economic activities and steel consumption during the first half of 2020. Malaysia was not spared, and the effect of this fallout significantly impacted the Group’s performance during the first nine months of 2020, due to mandatory nationwide lockdowns.

While the Group’s performance was significantly affected during the first half of 2020, underlying domestic steel demand rebounded strongly throughout the second half of 2020. The strong economic recovery is reflected in the Group’s financial results.

The first half of 2021 was a race between our national vaccination progress and the spread of new COVID-19 variants. The sharp resurgence of COVID-19 cases, hospitalisations, and deaths from the month of April 2021 onwards, weighed on Malaysia’s healthcare system and economic recovery. Due to the rapidly increasing number of cases and hospitalisations, the government of Malaysia imposed a full mandatory nationwide lockdown on the 1st of June, 2021. The measure significantly affected the final month of FY2021 as the Group was not allowed to operate.

Thankfully, the national vaccination programme picked up in the month of June 2021, showing an affirmative progress in the following months. We are optimistic that the rapid vaccination campaign would lead to the ease of restrictions and expedite economic recovery. However, the risk remains high at areas where cases and deaths are still on the rise.

Through this backdrop filled with numerous disruptions and risks, the Group’s employees have shown resilience in ensuring the Group is able to achieve a turnaround in performance despite difficult circumstances.


For FY2021, the CRC division’s sales revenue increased by 19.7% to RM499.8 million. The growth is mainly attributed by higher sales volume and higher selling prices. Total sales tonnage increased by 17.1% to 180,792 tonnes. The CRC division registered a Profit Before Tax of RM40.62 million for FY2021. The improvement in performance is rather timely for the Group after enduring years of injury to our operations from Chinese and Vietnamese steel dumping activities, coupled with the significant impact of the COVID-19 pandemic.

During the first financial quarter (Q1), sales revenue of RM99.8 million was 36.9% higher than the previous quarter, while sales tonnage of 38,237 tonnes was 38.9% higher than the previous quarter. The rebound was due to the resumption of nationwide economic activities and a healthy demand from all customer segments. It is worth noting that the CRC division was on course for a strong quarter, if not for an unfortunate equipment breakdown that derailed the August 2020 production. Due to this unprecedented event, the CRC division registered a Profit Before Tax (PBT) of RM1.81 million.

For the second financial quarter (Q2), revenue improved by 33.4% to RM133.1 million, with sales tonnage showing an improvement of 40.2% to 53,620 tonnes. The CRC division registered a PBT of RM12.23 million driven by global steel supply tightness due to a global surge in steel demand as manufacturing supply chains began to normalise following the forced global lockdowns caused by the COVID-19 pandemic.

For the third financial quarter (Q3), revenue further improved by 22.9% to RM163.6 million. Sales tonnage increased by 9.2% to 58,550 tonnes for the quarter. The strong performance is mainly attributed by a combination of factors emanating from certain sectors driven by the pandemic and ensuing stimulus spending. During this period of time, the demand for white goods, furniture, cars, and steel drums increased significantly.

For the fourth financial quarter (Q4), sales revenue declined by 36.9% to RM103.3 million. Sales tonnage decreased by 48.1% and PBT declined by 39.9% to RM9.98 million. The steep decline is primarily caused by the imposition of a mandatory nationwide full lockdown from June 2021 due to the spike of COVID-19 cases and hospitalisations. As a result, the CRC division was unable to operate during the month of June 2021.


Hot Rolled Coil (“HRC”) steel sheets are the basic raw material used in the production of Cold Rolled Coils (“CRC”) steel sheets. CRC manufacturers, in general, produce two types of CRC, namely:
1. Scrap Based CRC (produced from Scrap Based HRC), and
2. Iron Ore Based CRC (produced from Iron Ore Based HRC).

Scrap Based CRC is regarded as inferior in metallurgical quality as it contains impurities derived from the scrap used to manufacture the Scrap Based HRC. Manufactured from lower quality HRC, Scrap Based CRC is typically used by downstream customers, mainly in the Steel Tube and Furniture sectors, which do not require high quality CRC.

Conversely, due to its higher quality, the Iron Ore Based CRC is used by a different group of customers, primarily involved in the production of Steel Drums for the palm oil and petroleum sectors, in the production of Colour Coated and Galvanised CRC (usually for the manufacture of roof sheet), in the production of Electrical Appliances mostly comprising of white goods such as washing machines, refrigerators, microwaves ovens and rice cookers, and also in the production of components and parts for the automotive industry.

Historically, all HRC and CRC Steel Manufacturers in Malaysia were Malaysian owned. However, the mills have been either shutdown or taken over by foreign owned steel mills over the years, the latest being YKGI Holdings Berhad’s disposal of its coated coil business to NS Bluescope Sdn Bhd in 2019 due to sustained losses caused by years of battling cheap imported flat steel products.

Mycron is one of the few fully operational Malaysian-owned and managed flat steel mills in the nation. As a forerunner in the industry, Mycron is proud to be part of the nation’s journey and goal in achieving a fully-developed nation status. Thankfully, the government is gradually recognising the contribution of the Malaysian Steel Industry and is working towards safeguarding local steel mills such as Mycron against unfair trade. To play its part in this measure, Mycron continues to engage with the Government to push for immediate actions in order to protect and ensure the sustainability of the steel industry.

Exhibit 5 provides details of utilisation rates and total capacity for the domestic CRC industry. Over the past four years, Malaysian CRC producers have been facing substantial underutilisation of production capacity at 47.9%. Domestic CRC production decreased by 6.8% from 545,035 tonnes in 2019 to 508,033 tonnes in 2020.

From 2017 to 2019, the underutilised production capacity and lower production tonnage were predominantly due to substantial CRC imports. However, in 2020, the aforementioned scenarios were primarily influenced by Malaysia’s government-imposed lockdowns.

Exhibit 6 shows the summary of imports of flat steel into Malaysia. Imports of Cold Rolled Coil (CRC) sheets and strips are 624,248 tonnes, while the combined imports of CRC and CRC Related Products are 1,325,549 tonnes. Worldwide economic lockdowns severely disrupted the steel supply chain. When global economic sectors reopened, the fear of supply shortages resulted in many steel producers hoarding material to prioritise domestic consumption over exportation.

To ensure a level-playing field for all domestic CRC producers, Mycron continues to lead the CRC industry in efforts to address dumped and subsidised steel imports that injure the domestic industry and the welfare of its workers and investors. Mycron will continue to engage relevant government ministries, agencies, and industry associations to address unscrupulous imports on the domestic steel industry and emphasise the need to safeguard the domestic steel industry.


For FY2021, the Steel Tube division’s sales revenue rose by 34.2% to RM272.9 million, whilst sales tonnage increased by 19.8% to 86,426 tonnes. The Steel Tube division registered a Profit Before Tax of RM29.36 million for FY2021. The improvement in performance is mainly due to the strong economic recovery which resulted in robust demand for steel tubes. This is reflected in the Group’s FY2021 results.

For the first financial quarter (Q1), sales revenue was RM62.3 million. Sales tonnage of 22,321 tonnes was notably higher than the immediate preceding quarter (Q4, FY2020) which was significantly affected by the MCO 1.0 lockdown. The steel tube division registered a Profit Before Tax (PBT) of RM3.54 million for the quarter.

For the second financial quarter (Q2), total sales revenue further improved by 16.7% to RM72.7 million. Sales tonnage rose by 12.7% to 25,151 tonnes due to robust domestic demand for steel tubes and the reopening of more domestic economic sectors after lockdowns. PBT for the quarter increased to RM8.64 million.

For the third financial quarter (Q3), total sales revenue increased by 5.4% to RM76.6 million. However, sales tonnage decreased by 7.5% to 23,275 tonnes due to Global HRC supply tightness as the demand for steel was fast outpacing supply, leading to supply tightness. PBT for the quarter was RM8.97 million.

The fourth financial quarter (Q4) was profoundly affected by the full month mandatory lockdown (FMCO) which started in June 2021. As a result, sales revenue declined by 20.0% to RM61.3 million while sales tonnage decreased by 32.6% to 15,679 tonnes from the preceding quarter. The Steel Tube division registered a PBT of RM8.21 million for the quarter.


In 2020, Malaysia’s overall flat steel consumption decreased to 4.9 million tonnes from 6.3 million tonnes in the previous year, a decrease of 22.0%. Exhibit 8 provides a breakdown of the domestic flat steel consumption for the past five years.

The domestic consumption of HRC decreased by 19.5% to 1.6 million tonnes while the consumption of Welded Pipes & Tubes decreased by 36.94% to 0.46 million tonnes. On the CRC front, domestic consumption decreased by 21.95% to 1.1 million tonnes from the previous year of 1.4 million tonnes. These decreases are attributed by slow market demand in the CRC and pipe sectors as a result of government-imposed lockdowns.

Exhibit 9 provides a summary of the overall movement of flat steel in Malaysia for the calendar year 2020.

It is worth noting that for CRC, of the 1.1 million tonnes consumed in 2020, 0.62 million tonnes were imported CRC compared to only 0.51 million tonnes which was manufactured in Malaysia. Although this seems to be an indication of improvement, Malaysian CRC manufacturers continue to operate at only half capacity utilisation. There is enormous opportunity for domestic CRC producers to supply the demand for domestic consumption, and should be given priority.


Despite the impact of COVID-19 on steel demand, the flat steel industry was highly volatile during 2020 and 2021.

A string of events stemming from the COVID-19 outbreak evolving into a pandemic during early 2020, followed by various industries preparing for shutdowns, weakening demand, capacity cuts, and focus on inventory depletion, led to steel price lows, especially HRC and CRC. The lows were during the months of May to June 2020 where HRC prices ranged between USD410 and USD440 per tonne.

As lockdown measures eased, steel prices rebounded across most global markets at the start of July 2020. Steel activities across the globe gradually picked up, demand from various sectors strengthened, and inventories swiftly declined as economies reopened for business. The rebound, coupled with a strong increase in iron ore, coking coal, and various other commodities, supported a strong bounce in flat steel prices across the world.

By January 2021, HRC prices were hovering around USD700 per tonne. Global economic recovery had proven robust and HRC prices began to soar, recording high levels in March 2021 and the consecutive months.

Demand for flat steel rebounded more strongly than anticipated and at a more rapid pace than the supply available. Many steel mills that were shutdown during the onset of the pandemic, did not restart their blast furnaces quick enough. The disparity led to extended lead time and reduced deliveries, which eventually drove global HRC prices to record-highs in May 2021.

In China, the abolishment of the 13% export steel tax rebates announced by the Chinese government in May 2021 to discourage cheap Chinese steel exports, caused flat steel prices to strengthen further. This was the beginning of the normalisation of the global steel industry after a decade of cheap Chinese steel that spawned significant negative impact on the global steel industry.

Overall, global HRC prices have doubled over the last 6 to 12 months. These record high prices for HRC have put pressure on the Group’s cashflow, as HRC is the key raw material for both MCRC and MST.


Hot Rolled Coil (“HRC”) is the key raw material used by the Group, for both its CRC and Steel Tube business segments.

The COVID-19 pandemic had dramatically shifted the strategies and operations of HRC producers as they cut their steel output with the prediction that global steel consumption would remain sluggish in the remainder of 2020.

As economies reopened, the speed of rebound in steel demand caught many steel producers by surprise. Steel demand had rebounded faster than available supply. Demand pressure created long lead times especially for HRC. This supply-demand pressure drove HRC prices higher.

Tight supply, production outages, and iron ore price spikes caused HRC prices to be on a constant uptrend throughout the first half of 2021 (Refer to Exhibit 10 & 11). The crackdown on steel ore production (capacity cuts), pollution, and abolishment of export rebates by the Chinese government, were among other reasons for record-high HRC prices.

It is worth noting that during this period of global steel tightness, scarce supply, and global protectionism in the wake of the COVID-19 pandemic, the presence of domestic flat steel producers plays a crucial role in ensuring adequate and consistent supply of flat steel to the domestic downstream industry. Although the downstream industries may never admit it, there were many months throughout the past year that witnessed tremendous scarcity of steel supply in the international steel market, especially for flat steel products.


Apart from HRC, which is the core raw material for the manufacture of CRC and steel tube, the industry is also a large consumer of electricity for its rolling plants and natural gas, which is primarily used to anneal CRC. In the past decade, domestic CRC producers have experienced substantial price hikes in these two inputs, which have contributed to significant margin squeeze.

As announced by the Energy Commission of Malaysia, the initiative to liberalise the price of natural gas has been postponed. Thus, natural gas price will remain regulated until December 2021.

Aligned with its initiative to support the government’s efforts to combat the negative impacts of the COVID-19 pandemic and to ensure business continuity, Gas Malaysia announced a price reduction in January 2021. The average natural gas selling price was revised to RM22.12/mmbtu for the first quarter 2021, which translates to a saving of RM11.33/mmbtu or 34% lower than the 2020 average price. However, the average selling price normalised again at RM30/mmbtu in July 2021.

In the similar vein, Tenaga Nasional Berhad (TNB) had also taken proactive action to waive the ICPT charges from July 2020 onwards, followed by the reduction of coal and gas costs respectively. TNB’s announcement to extend the ICPT rebate of RM0.02 per kWh for first half of 2021 would translate to a total savings of approximately RM500,000 over a 12-month period, for the Group.


As Mycron enters the 4th Industrial Revolution, both the Steel Tube and CRC operations are paving way to digitally transform their operations and adopt a “Lean Manufacturing” philosophy.

MST had completed various improvement projects such as the single-piece breakdown roll for its largest pipe mill replacing its former 3-piece design, an upgraded Pipe Mill Uncoiler Braking System, and a Piler PLC system.

MST had successfully upgraded its Galvanizing Plant furnace from a conventional design furnace, to a fuel-efficient furnace. The innovated furnace design no longer uses a heat circulation fan, which translates up to approximately RM100,000 savings per year in maintenance and downtime costs.

In further promoting sustainability, MST’s new solar panel system on its factories rooftops, had been successfully installed and had been operating since March 2021. Under the nation’s renewable Net Energy Metering (NEM) 2.0 Scheme, MST’s utilisation of solar power totalling 0.83 MWp translates to RM135,000 in electricity cost savings per annum. At the same time, this solar system would reduce the division’s carbon footprint by approximately 432 metric tonnes of CO2 annually.

The completion of MST’s Manufacturing Execution System (MES) was delayed due to the resurgence in COVID-19 cases and continuous lockdowns. The MES which aims to enhance lean manufacturing by eliminating waste, optimising processes, reducing costs, and improving innovation, is now expected to be fully integrated across all of MST’s factories and plants by Q2 of FY2022.

To further maximise operational efficiency, MST has 15 projects lined up in FY2022 for the purpose of upgrading its production line machinery, equipment, and systems.

MCRC’s investment in the state-of-the-art pickling and acid recovery technology aims to improve the overall conversion cost, expand into new market segments, and reduce environmental impact through a close loop acid-recycling system.

The delay in the Acid Regeneration Plant (ARP) project was attributed by the multiple phases of movement control orders, coupled with challenges in obtaining visa and permit approvals for the entry of technical professionals from SMS Group, Austria into Malaysia for the testing and commissioning phase. Nonetheless, the ARP was finally commissioned in July 2021 after an 18-month delay from its original schedule.


The long-term outlook for the CRC and Steel Tube industry depends on several factors, including pricing of raw materials such as iron ore and coking coal, and Malaysia’s economic recovery from a prolonged FMCO lockdown, which significantly impacted key steel consuming industries such as construction, manufacturing, and automotive. Perhaps, the most defining factor would be China’s stance on steel production.

Historically, demand dynamics in China significantly affected the global steel business, mainly due to huge fluctuations in net steel exports and export price subsidies that resulted in worldwide anti-dumping action against Chinese steel. However, in 2021, the Chinese government shifted their policy and almost immediately began clamping down on pollution caused by overproduction of steel; aggressively reducing China’s steelmaking capacity for the next 5 to 10 years.

The removal of export rebates, and the potential implementation of export taxes on steel products, together with the substantial cut in China’s steelmaking capacity in the near future, certainly bodes well for the long-term sustainability of the global and domestic steel industry.

Domestically, the successful Anti-Dumping review with regards to imported CRC of 1,300mm width and below, originating from Vietnam on 22 January 2021, levelled the playing field for the CRC division and stopped Vietnamese steel players from injuring domestic CRC producers.

Continuing with Mycron’s efforts to address unfair trade practices and to ensure a long-term sustainable level playing field for Malaysian CRC producers, MCRC filed a petition to initiate a sunset review of anti-dumping duty with regards to CRC of 1,300mm width and below from China, Vietnam, and Korea. This is to ensure steel producers from these countries do not restart using Malaysia as their dumping ground. The sunset review was also a success, with existing anti-dumping duties being extended for another five years until 8 October 2026.

Operationally, in the areas where we pose control, the Group is committed to improving our operations, maximising our product quality, developing the talents of our employees, addressing the challenges of our customers, and providing them with a one-stop solution.

The Group is focused on value creation by developing and maintaining a cost competitive structure, centred on operational excellence. The Group remains committed to upholding our position as the industry leader, by striving to create sustainable competitive advantage, with a customer-centric focus, delivering high-quality products.


With prolonged lockdowns on businesses extending into the next financial year, the Group’s prospect outlook for the first half of FY2022 is rather uncertain.

The nation’s preceding five quarters of GDP (q-o-q) contraction would likely extend into its sixth in conjunction with our first financial quarter of FY2022. The upliftment of lockdown on the non-essential manufacturing sectors on from 16th August 2021 brought much relief to our industry. However, the path to business and economic recovery is expected to be gradual and uneven, considering the severity of damage done, lingering curbs, and limited global vaccine supply.

Nevertheless, steel demand from on-going projects and contrarian-sectors thriving from the pandemic, amidst supply-chain tightness, is expected to keep the steel sector afloat and running. The Group’s steel businesses may achieve a turnaround performance from the second financial quarter and onwards, especially if the nation’s COVID-19 National Recovery Plan (NRP) progresses beyond Phase 1 for key states.

The second half of FY2022 could offer better prospects for the steel operations on the back of the nation attaining herd immunity from vaccination, progression to NRP Phases 3 and 4, easing of border restrictions, and simultaneous recovery of regional economies. The Group is optimistic that the government would continue to adopt “iron and steel” policies supportive of the domestic steel industry, particularly over the pandemic recover phase.

On the global front, accelerated green targets and initiative due to pressing climate change threats would likely cap excessive steel capacity, output, or dumping, which would work in favour of sustainable prices and margins for steel players. Significant allocation for infrastructure spending of the world’s two largest economies, also adds optimism to global steel demand outlook and possibly supply chain tightness in the short to mid term.

Nevertheless, significant downside risks persist with domineering COVID-19 variants and challenges which the new normal could pose on growth, recovery, and impact on steel demand. Another risk worth noting would be the “China factor” which historically, has been known to throw surprises and induce volatility to regional steel supply-demand prices.


Mycron continues to pledge its commitment towards anti-corruption. The Group reinforces its strict, zero-tolerance position against corruption, bribery, or any kind of abuse of power. Directors, Senior Officers and employees have signified their undertaking through the personal commitment and anti-corruption pledges.

The Group also expects all of its business partners and associates to operate in full compliance with the Group’s policies, follow the highest standards of ethical conduct, integrity, and professionalism. Suppliers, vendors, and contractors have been made aware of the Group’s AntiCorruption Policy and affirmed compliance through their respective declarations. The Group shall continue to raise anti-corruption awareness amongst its internal and external stakeholders.


On behalf of the Board, I would like to express my sincere gratitude to the management team and staff for their commitment, dedication and contributions to Mycron. To our valued business associates, customers, shareholders; thank you for your continued invaluable support, confidence, and trust, you have placed in us.

Tunku Dato' Yaacob Khyra

Executive Chairman