MALAYSIA’S steel industry has urged the government to intensify engagement with the United States after Washington launched an investigation into global manufacturing overcapacity that includes scrutiny of Malaysia’s steel sector.
The Malaysian Iron and Steel Industry Federation said open dialogue and greater transparency would be crucial in addressing questions raised by American authorities regarding production capacity and trade flows.
The call follows the announcement by the Office of the United States Trade Representative of an investigation examining potential excess industrial capacity across 16 economies, amid concerns that structural overproduction could distort international markets.
The federation said Malaysia should maintain constructive communication with the United States to provide clearer information about its steel production levels and export patterns.
“Malaysia should continue to engage constructively with US authorities and provide transparent information on production, capacity and trade flows,” the federation said in a statement.
It added that ongoing collaboration among the government, industry players and international partners would be essential to resolve trade concerns through evidence-based discussions.
The American review focuses on economies believed to have persistent trade surpluses that may indicate structural industrial overcapacity.
Among those included in the investigation are China, the European Union, Japan, South Korea, Singapore, Bangladesh, Switzerland, Norway, India, Mexico, Taiwan, Vietnam, Thailand, Indonesia and Cambodia.
For Malaysia, the investigation highlighted concerns about potential excess capacity within the domestic steel sector.
Industry figures show that Malaysia’s steel production capacity expanded by about 22 per cent between 2018 and 2022, even as domestic demand declined by roughly 25 per cent during the same period.
The federation explained that much of the capacity expansion during those years was aimed at reducing reliance on imported steel and strengthening the resilience of local supply chains.
Demand weakened significantly during the Covid-19 pandemic between 2019 and 2022, when construction activity slowed and industrial output declined.
Manufacturers also faced growing competition from imported steel products and slower growth in domestic demand, creating additional pressures on the industry.
In response, the government introduced a number of measures to stabilise the sector and ensure a more sustainable industry structure.
These steps included the imposition of a moratorium on new steel manufacturing licences by the Ministry of Investment, Trade and Industry, the formation of a Steel Independent Committee in 2024 and the launch of the Steel Industry Roadmap 2030 in September last year.
Despite concerns raised by Washington, the federation noted that Malaysia’s steel exports to the United States remain relatively small.
Trade flows have also been affected by higher tariffs imposed by the United States under Section 232 of the Trade Expansion Act of 1962, which were increased from 25 per cent to 50 per cent in June 2025.
The federation said the global imbalance in the steel industry stems from several factors, including economic downturns, government policies and market distortions.
A major driver of global oversupply has been the rapid expansion of China’s steel sector over the past two decades. As China’s domestic demand slowed, surplus production has increasingly been channelled into export markets.
By 2025, China’s steel exports had risen to about 119 million tonnes, the highest level recorded since 2015, illustrating the scale of global supply pressures affecting the industry. - March 15, 2026
