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

Chairman's Message

On behalf of the Board of Directors, I present the Annual Report of Mycron Steel Berhad and its group of companies (“the Group” or “Mycron”) for the financial year ended 30 June 2020 (“FY2020”).


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.


For the year under review, the Group registered a 14.1% lower total revenue of RM596 million as compared to RM694 million in the preceding financial year, mainly due to lower sales tonnage and pricing. The Group’s FY2020 total steel tonnage decreased by 5.2% to 226,471 tonnes (FY2019: 238,982 tonnes).

Both subsidiaries were affected by low revenue resulting from the COVID-19 pandemic, which severely impacted the second half of this financial year. The CRC division recorded revenue of RM418 million as compared to RM463 million in the previous year, representing a decrease of 9.7%. Similarly, the Steel Tube division registered lower revenue of RM203 million from the preceding year of RM260 million, a decline of 21.9%.

In terms of tonnage, CRC sales decreased by 0.2% to 154,348 tonnes compared to 154,583 tonnes in the preceding year. CRC sales tonnage include secondary products and services like second grade CRC, pickled and oiled HRC, and scrap.

Steel Tube sales decreased by 14.5% to 72,123 tonnes compared to 84,399 tonnes in the preceding year. Sales tonnage for Steel Tube include other secondary products and services such as second grade pipes, slitted edge, hot dipping, pipe-forming and pipe slitting services and scrap.


FY2020 was a challenging year for Mycron. In view of the Group’s financial position, the Board of Directors do not recommend the payment of any dividend for the financial year ended 30 June 2020.


The global pandemic arising from the novel coronavirus, officially named as COVID-19, has significantly impacted economies, businesses, and livelihoods of people from across the world.

Governments across the globe have adopted various approaches in containing and controlling the spread of COVID-19. These include imposing nationwide lockdowns, curfews, border and travel restrictions, business and plant shutdowns, and flexible work schedules.

As for Malaysia, the Government imposed a Movement Control Order (“MCO”) on 18 March 2020 that resulted in mandatory business closures, ban on public gatherings, and strict quarantine procedures.

These governmental efforts and responses in addressing the pandemic have led to significant disruptions in trade and commerce, lower demand for goods and services, coupled with uncertainty of the near and long-term impact on the domestic/international economy, as well as health. These developments and consequences of the pandemic have had a material impact on the Group’s FY2020 operations and financial results.


For FY2020, the CRC division achieved sales revenue of RM417.7 million, which was RM45.3 million lower than the preceding year. The decline is mainly attributable to unfair competition from Vietnamese CRC producers that were aggressively price dumping CRC into the Malaysian domestic steel market during the first half of FY2020. The latter half of FY2020 was significantly impacted by the COVID-19 pandemic. The ramifications of this pandemic impaired CRC’s operations during the third and fourth quarter of FY2020.

CRC’s revenue for the first quarter (Q1) was higher than the preceding quarter with sales tonnage increasing by 35.3%. As a result, the segment registered a pre-tax profit of RM0.71 million for the quarter.

In the second quarter (Q2), sales revenue and tonnage dropped by 10.4% and 5.0% respectively. As a result, CRC division registered a pre-tax loss of RM3.63 million, mainly due to unfair competition from Vietnamese CRC producers. The prolonged thin-to-negative spreads, between the cost of CRC’s raw material (HRC), and imported CRC, severely affected the CRC division’s sales and margins.

These negative margin spreads (i.e. where the price of CRC finished goods, is actually cheaper than the cost of its core HRC raw material) was caused by direct subsidies (distinguished as tax rebates), by as much as 16%, given by the China governments, for exported Chinese CRC. These subsidised Chinese CRC enter Vietnam, and are physically swapped with Vietnamese made CRC, which are then exported to Malaysia. The physical CRC entering Malaysia, may not be Chinese made, but the Chinese subsidies, allows Vietnamese CRC to be shipped to Malaysia, at subsidised prices.

The third quarter (Q3) was a demanding quarter for the CRC division. The division reported a 13.7% drop in sales tonnage and recorded a pre-tax loss of RM5.99 million. The loss was due to a combination factors such as seasonal Chinese New Year holidays, the beginning of the COVID-19 outbreak in China, and the implementation of the MCO by the Malaysian government on 18 March 2020. The global outbreak of the COVID-19 virus caused steel prices to slump during the third quarter.

The fourth quarter (Q4) was an extremely challenging quarter due to COVID-19’s impact on the domestic economy. The mandatory closure of manufacturing and business activities domestically since the start of the MCO, significantly impaired Mycron’s sales and revenue for Q4. Even though the CRC division had healthy book orders, the CRC division was not able to deliver during the months of April and May, as most sectors of the economy only began resuming their operations in June. Due to the reasons stated above, the CRC division’s sales tonnage during Q4 dropped by 26.7% to 27,520 tonnes, whilst sales revenue dropped by 23.3% to RM72.9 million. The division registered a pre-tax loss of RM3.49 million for the quarter.


The Steel Tube division’s revenue decreased by 21.7% to RM203.3 million for FY2020 due to slow demand for steel pipes and the COVID-19 pandemic impact on its operations. The tube segment registered a lower pre-tax profit of RM1.61 million for FY2020 compared to the preceding year.

For the first financial quarter (Q1), the Steel Tube segment was relatively stable as sales tonnage recorded a slight increase that translated to 20,462 tonnes compared to the previous quarter of 20,082 tonnes. However, sales revenue dropped by 2.4% to RM60.0 million. Consequently, Profit Before Tax (PBT) for the quarter dropped to RM0.35 million. This is mainly due to the significant slowdown of infrastructure projects and construction activities across Malaysia. The drastic softening of steel prices also caused buyers to bide their time in making purchases.

The Steel Tube division reported a flat second quarter (Q2) with marginal profit. Total sales revenue was RM63.3 million, which is 5.5% higher than the previous quarter. Domestic demand for pipes remained weak, resulting in a downward trend throughout the quarter. Steel Tube division only managed to achieve a PBT of RM0.15 million in Q2.

The third financial quarter (Q3) was a mixed quarter. The Steel Tube division registered a decline in sales tonnage and revenue due to the seasonal Chinese New Year holidays and the beginning of the COVID-19 pandemic. However, it registered a pre-tax profit of RM3.1 million due to higher margins achieved.

The Steel Tube division suffered a weak fourth quarter (Q4) with significant decline in sales tonnage, revenue, and profit. This was mainly due as a consequence of the MCO and mandatory business closures imposed by the Malaysian government in March 2020. Sales revenue dropped by 63.7% to RM21.3 million. Sales tonnage dropped by 60.5% to 8,200 tonnes and the tube division registered a loss before tax of RM1.99 million.


During the financial year under review, the global and domestic steel industry environment proved to be extremely demanding, on the back of significant global and domestic economic headwinds during the first half, and the unprecedented COVID-19 global impact on the world’s economy and health, during the latter half.

The COVID-19 outbreak has put the global, as well as the Malaysian economy, under immense stress. As governments across the world imposed nationwide lockdowns to curb its spread, the pandemic resulted in the shutdown of global economies. It had severely impaired and injured manufacturing supply chains which directly affects the global steel sector, as it supports multiple industries such as automotive, electrical and electronics, construction, and infrastructure. Steel supply chains are integrated, complex, and interdependent.

For an industry that has grappled with legacy challenges such as oversupply and lower demand over the past few years, this COVID-19 crisis is the toughest and most challenging time the steel industry has faced as economies reel from the fallout of this pandemic. Considering the scale of distress on a global standpoint, it will require an extraordinary effort towards full recovery.


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

However, 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 like washing machines, refrigerators, microwaves ovens, rice cookers, and also in the production of components and parts for the automotive industry.

Over the years, all HRC and CRC Steel Manufacturers in Malaysia were Malaysian owned. As the years passed, one after another were either shut down or taken over by foreign owned steel mills, the latest being YKGI Holdings Berhad’s disposal of its plant and factory 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 last fully operational Malaysian owned and managed flat steel mill in the country. Mycron is proud to be part of the journey of the country’s goal of achieving a fully developed nation status. The Government has slowly recognised the contribution of the Malaysian Steel Industry and is working towards safeguarding local steel mills such as Mycron, against unfair trade. Mycron is constantly engaged will the Government to push for immediate action to protect and ensure sustainability of the steel industry.

Exhibit 6 provides details of utilisation rates and total capacity for the domestic CRC industry. Over the past four years, Malaysian domestic CRC producers have been facing substantial under-utilisation of production capacity, at 51%, predominantly due to substantial CRC imports.

Domestic CRC production dropped by 21% from 691,200 tonnes in 2016 to 545,035 tonnes in 2019 while CRC imports as a percentage of CRC consumption stands at a glaring 66%.

Exhibit 7 shows the summary of imports of flat steel into Malaysia. Imports of Cold Rolled Coil (CRC) sheets and strips are 928,678 tonnes, while the combined imports of CRC and CRC Related Products reduced to 1,612,518 tonnes, the bulk of which could have been manufactured locally.

To address the surge in CRC imports, 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 is persistently in dialogue with the Government about the impact of unscrupulous imports on the domestic steel industry and the need to safeguard the domestic steel industry.


In 2019, Malaysia’s overall flat steel consumption decreased to 6.30 million tonnes from 6.46 million tonnes in the previous year, a decrease of 2.4%. Exhibit 8 provides a breakdown of the domestic flat steel consumption for the past five years.

The domestic consumption of HRC increased by 18.1% to 1.99 million tonnes.

The consumption of Welded Pipes & Tubes on the other hand, decreased by 21.9% to 0.73 million tonnes. The decrease is attributable to slow market demand in the pipe sector.

On the CRC front, domestic consumption decreased by 10.2% to 1.41 million tonnes from the previous year of 1.57 million tonnes.

Exhibit 9 provides a summary of the overall movement of flat steel in Malaysia for the calendar year 2019. It is noted that for CRC, of the 1.41 million tonnes consumed in 2019, 0.93 million tonnes were imported CRC compared to only 0.55 million tonnes which was manufactured in Malaysia. It is a wonder how Malaysia permits its CRC consumption to be 66.1% supplied by imports, whilst Malaysian CRC manufacturers are only operating at 51% of capacity utilisation. This extreme misallocation of resources needs to be addressed urgently at a policy level.


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 prediction that global steel consumption would remain sluggish in the month of April, and months to come.

Erratic purchasing patterns coupled with buyers’ reservations in view of negative steel trends, and the possession of high inventories during MCO, resulted in the dipping of HRC price to USD404 per tonne in May 2020 (refer to Exhibit 10).

However, steel prices edged up again in June supported by China’s steady demand from major infrastructure and construction sectors as China concluded its lockdown period in the end of April.

Thin price spreads ranging between RM125 to RM266 per tonne (refer to Exhibit 11), of International HRC (the raw material) and imported CRC (the finished goods), have substantially impacted Mycron’s conversion cost and operating margins.


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, Malaysian domestic CRC producers, have experienced substantial price hikes in these two inputs, which have contributed to significant margin squeeze.

It can be seen from the charts, that the cost of natural gas and electricity have been growing at a significant rate causing substantial cost increases to the manufacturing sector. The country’s management of natural gas cost and its impact on the cost of electricity, is causing an extensive challenge to the economy.

Although Gas Malaysia revised the surcharge (GCPT) by 2% from RM1.92/mmbtu to RM1.25/mmbtu and Tenaga Nasional Berhad revised its ICPT charges from 2.55cent/KWh to 2.00cent/KWh; these revisions remain insufficient to reduce Mycron’s operating costs.


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

MCRC and MST recently entered into a Solar Power Purchase Agreement (“SPPA”) with Engie Services Malaysia Sdn Bhd (“Engie”) on 16 March 2020. Through the SPPA, Engie would build, operate and own a solar photovoltaic generating plant with over 8,000 panels to be installed on the rooftops of MCRC and MST. The renewable energy from this solar panel installation is anticipated to save Mycron approximately 4.1 GWh (Gigawatt hours) of electricity per annum, thus reducing Group’s overall carbon footprint.

MST is now entering its third and final phase of the Manufacturing Execution System (“MES”) which was first initiated in July 2018. The final phase will complete the integration of all three factories involving a total of 18 production machines. The MES is an integration of advanced digital information technology with the existing Enterprise Resource Planning (ERP) system. It aims to improve production line efficiencies, promote effective communication amongst departments, increase productivity, reduce human errors, and reduce unplanned downtime.

MST is undertaking another project which will reduce energy consumption in its tube manufacturing operations. This project involves the retrofitting of the existing furnace in MST’s galvanising plant. A new furnace with higher capacity and fuel efficiency is expected to be installed by the third quarter of FY2021.

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 new Acid Regeneration Plant (“ARP”) which was due for completion in the third quarter of FY2020, fell behind schedule due to the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO). The project is currently 60% underway, pending its commissioning and installation by the technical expert from SMS Group, Austria and is expected to complete by the fourth quarter of FY2021.

The erection and commissioning of MCRC’s Continuous Picking Line (CPL) had been completed, with its first prime coil produced in February 2020. The project is now in its handover phase, pending the fulfilment of the acceptance certificate and performance guarantee.


The successful Anti-Dumping petition on CRC imports of more than 1,300mm width from China, Vietnam, Korea, and Japan, on 24 December 2019, provided positive support to Mycron’s CRC division. This measure will be effective from December 2019 until December 2024.

Continuing with Mycron’s efforts to address unfair trade practices, and to stop CRC price dumping from Vietnamese CRC producers, MCRC has filed a petition to initiate a review of Anti-Dumping Duty with regards to imported CRC of 1,300mm width and below, originating from Vietnam. Mycron is confident of obtaining higher Anti-Dumping duties against Vietnamese CRC producers, which will improve the domestic industry’s future outlook.

A CRC safeguard petition remains an option to the Group, should the duties imposed after the review proved to be inadequate.

Holistic development remains crucial for the substantiality of the Malaysian domestic steel industry value chain. To address unfair competition and unjust operating environment from cheap imports, the Group has been actively engaging various government ministries by advocating reforms and developing the way forward for the industry, by active participation in reshaping the National Iron and Steel Policy.

The implementation and execution of the new National Iron and Steel Policy by the end of 2020 will be a game changer for the domestic steel industry for the foreseeable future.

Mycron is confident that the new policy and measures, will be implemented, to protect Malaysian steel manufacturers and their workforce.


The Group’s outlook for the new financial year remains cautious as the duration, spread, and severity of the COVID-19 pandemic remains highly unpredictable. The extent to which the pandemic will impact the Group’s operations depends on future developments, such as the potential surge of the outbreak, which cannot be anticipated as of the present.

The revival of Malaysia’s mega projects such as the East Coast Rail Link (ECRL), Kuala Lumpur-Singapore High-Speed Rail (HSR), and Mass Rapid Transit Line 3 (MRT3) should increase domestic steel demand, which in turn, would favour the Group’s operations.

Barring another COVID-19 wave in Malaysia, the Group assumes an improvement in domestic demand for steel products. There are positive signs in the global and domestic steel industry, and if it remains sustainable, Myron’s financial performance will improve in FY2021.

Our most important value and priority during this time remains the health and safety of our employees, our families, and our Malaysian community.


Mycron is fully committed toward eradicating corruption. The Group maintains a strict, zero-tolerance position against corruption, bribery, or any kind of abuse of power. Aligned with this, the Group had adopted its Anti-Corruption Framework and Policy on 1 June 2020.

The Group expects its Directors, Senior Officers, Employees, and Business Partners to operate in full compliance with the Company’s Policy, with the highest standard of ethical conduct, integrity, and professionalism. The full version of the policy is available on the company’s website (


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 the Group. 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