left right
spacer
spacer
spacer
spacer home about us out business investor relations media centre careers contact us spacer
line
spacer
spacer
navigation
home
about us
our business
investor relations
media center
latest news
2009
archived news
2008
2007
careers
contact us
 
spacer
spacer sales enquiries spacer
spacer
  -
spacer spacer
 
Latest News
 
  15 June 2009 - Hot rolled coil price seen to rise from August

KUALA LUMPUR: Hot rolled coil price is likely to rise from August due to anticipated higher demand for flat steel products in the second half of this year, industry players said. “There are rumours that the domestic price may rise by about RM100 to RM200 per tonne,” an industry player told The Edge Financial Daily. “This is yet to be seen. It should be announced by the second week of this month.”

Another player said that a higher local price for hot rolled coil was expected some time in the middle of this month. The speedier implementation of the government stimulus package was among the reasons for a boost in demand for steel products, according to an industry player.

Hot rolled coil price is expected to hover between RM2,100 and RM2,200 per tonne between June and July. It price jumped to as high as RM3,800 per tonne last October before correcting sharply by 10% in November, and subsequently fell to as low as RM1,600 per tonne in March this year. The surge in price is beneficial to secondary steel product makers as customers will place their orders in anticipation of the hike.

The local flat steel product makers, in particular electrical resistance welded steel pipe producers, include HIAP TECK VENTURE BHD [ HIAPTEK  0.980  -0.005 (-0.508%), MELEWAR INDUSTRIAL GROUP BHD [ MELEWAR  0.645  0.015 (2.381%)  ], CHOO BEE METAL INDUSTRIES BHD [ CHOOBEE  0.000  0.000 (0.000%) ] and AMALGAMATED INDUSTRIAL STEEL [ AISB  0.450  -0.025 (-5.263%)  ] Bhd (AISB).

Megasteel Sdn Bhd, a sister company of LION INDUSTRIES CORPORATION [ LIONIND  1.550  -0.020 (-1.274%) ] Bhd, is the sole supplier of hot rolled coils in the country. “This scenario will allow producers to adjust the market prices upwards quite immediately to help generate some positive margins they have not seen for more than six months,” said an industry player. Asked if the price increase was sustainable, he said it all depended on the international front where most governments had already or were in the process of implementing sizeable stimulus packages to create or boost demand.

“If global economic trend stabilises and ‘green shoots’ are formed, this becomes positive, and the rate of activities may rise again, reversing the past periods of negative gross domestic product growth for most countries,” he said. It is learnt that there was a surge in steel pipe orders last month, mainly due to the restocking by customers as inventories dropped.

“Admittedly, a near-term rebound in local steel consumption is primarily due to restocking activities amid a tight supply,” said AmResearch in a research note recently. However, an industry source said it was difficult to ascertain whether the recent surge in demand applied to all producers.

“Most producers and customers have been aggressively destocking their inventory since late 2008, and bought much less materials or products to replace as market demands were seriously squeezed,” he said. Nonetheless, the Malaysian Iron & Steel Industry Federation estimated domestic steel consumption to recover in 2010 from a 25% contraction this year as fiscal pump-priming initiatives by the federal government gained momentum, according to a recent report.

“If the international steel commodity continues to move up gradually during the second half of 2009, we would expect that the demand for products to surge and margins to rise,” said an industry player. The sector might see its bottom in the second quarter of this year, he said. “Once the second half improves, it should provide the momentum to push 2010 into better times for business activities,” he added.

AmResearch shared a similar view. Reiterating its overweight stance on the overall steel sector, it expected steel companies’ earnings to stage a strong turnaround from the third quarter of this year, where domestic demand was anticipated to supersede export sales as roll-out of select cornerstone projects under the Ninth Malaysia Plan gathered momentum.

A check with industry players confirmed that there had been an improvement in local demand for its flat steel products over the last quarter, mostly from stockists who were restocking and expecting prices to move up. A return of enquiries from certain export markets has also been seen. Most steel pipe makers are currently still operating in the red. Gross margins remain negative as market prices and demand have not picked up fast enough.

At market close last Friday, Hiap Teck fell one sen to RM1.06; Melewar fell 1.5 sen to 70.5 sen, Choo Bee was unchanged at RM1.54, while AISB rose two sen to 50 sen.

 
 
spacer
spacer

Home | About Us | Our Business | Investor Relations | Media Centre | Careers | Contact Us
Disclaimer