It is reported that with the automatic price mechanism for cement effective, construction players and steel millers in Malaysia are now bracing for a similar automatic price mechanism on steel bars and billets.

As per report many quarters want the government to quickly address mounting concerns over current tough business conditions. These include the prevailing tightness in steel supply among contractors while escalating raw material prices like iron ore and scrap metal are squeezing the operational costs and margins of steel millers.

According to an industry source, the government understands the predicament of local contractors, who blame steel millers for artificially reducing supply and steel millers, who say they have been increasing supply but are facing margin squeeze.

He said that the government is said to be seriously considering the proposal by Malaysia Iron and Steel Federation for an automatic price mechanism on steel bars and billets. He added that “Although no date has been set, there is strong indication that there will be an automatic price mechanism for the steel sector in future.”

However the report cited another source as saying that an automatic price mechanism on steel bars and billets may not be entirely acceptable to the construction industry. He said that “The success of automatic price mechanism on cement subject for revision in 2009 will be the benchmark for the government to introduce an APM on steel bars and billets.”