Malaysia Cold Rolled Coil (CRC) producers are enjoying good time recently and it is worth to take a look at those companies in the 2nd half of 2016.
All CRC producers had delivered very good results in the latest quarter report (30/6/2016) due to the following 2 major events:
1. Imposition of Anti-Dumping Duties over imported Cold Rolled Coil by Customs (May 2016)
2. Ceasation of operations by Megasteel (Malaysia SOLE producer of Hot Rolled Coil) (Feb 2016)
The following are the Top 4 CRC Producers in Malaysia and their respective yearly production capacity:
My findings & analysis in my other article:
Huge Upside Potential for CRC Steel Producers: CSCSteel (+24%) & Mycron (+90%) (Part 2)
Malaysia Government has imposed anti dumping duties on CRC imported from oversea for 5 years period effective from 24/5/2016.
Hot Rolled Coil (“HRC”) steel sheets are the basic raw material used for the production of the Cold Rolled Coils (“CRC”) steel sheets.
In general, CRC manufacturers produce two main types of CRC, namely:
1. Scrap Based CRC (made from Scrap Based HRC), and
2. Iron Ore Based CRC (made from Iron Ore Based HRC)
It should be noted that Scrap Based CRC has lower metallurgic qualities compared to Iron Ore Based CRC, because its raw material (i.e. Scrap Based HRC) contains impurities which were inherent in the scrap used to manufacture the HRC. Having a lower quality, Scrap Based CRC is used by downstream manufacturers, mainly in the steel tube and furniture sectors.
The higher quality Iron Ore Based CRC, is used by downstream manufacturers, mainly involved in producing steel drums for the petroleum and palm oil sectors, in making components for the automotive industry, in producing steel sheets for color coating and galvanizing purposes, and in the electronic and electrical appliances manufacturing of white goods, such as refrigerators, television sets, rice cookers, microwave ovens, etc.
Scrap Based HRC, which was supplied EXCLUSIVELY by the sole domestic HRC manufacturer, Megasteel Sdn Bhd (“Megasteel”), was used to manufacture lower grade CRC, steel pipes and tubes.
New HRC producer, Southern Steel = Installation unsuccessful & disputing with partner. (Sources: Announcement by SSteel on 30/8/2016 & Announcement on 11/7/2016)
To understand Hot & Cold Rolled Coils Production, please watch:
https://www.youtube.com/watch?v=9P1Ck0uYOnQ
Created by WealthWizard | Apr 06, 2017
Created by WealthWizard | Mar 27, 2017
Created by WealthWizard | Mar 21, 2017
Created by WealthWizard | Oct 07, 2016
Created by WealthWizard | Sep 26, 2016
Created by WealthWizard | Sep 23, 2016
Created by WealthWizard | Sep 12, 2016
Created by WealthWizard | Sep 06, 2016
Masteel is at the other segment of steel industry, the company has been doing very well in trying to keep the operations profitable in tough time.
2016-09-05 11:24
Thank you for sharing such very well written article, a lot of factual reference, keep it up!
2016-09-05 11:36
Good article. You write with understanding and knowledge of steel sector. Thank you.
2016-09-05 17:02
superb article. how to resist not buying after reading this masterpiece. tq very much for your kind sharing.
2016-09-06 00:41
Imposed duty on end products but welcome to import raw material from the same country, very interesting.
2016-09-06 01:16
hi wealthwizard..i'm going to buy more aggresively tomorrow..still got part 3?
2016-09-06 17:31
Thanks WealthWizard for your interesting information on the industry.While the upside looks good , at least until the end of the year, was wondering what is your take on the exchange rate ie.US$/RM for the imported raw material now that Megasteel has stopped production.The current exchange rate favours more negative biasness towards the ringgit irrespective whether the Fed Chairman decides to increase the interest rates.
Also because of the competition in the CRC industry ie.oligopoly..can a major buyer of the stock lock in at rate for a 3 year time frame ie. like a futures contract.This is because the government's infrastructure projects will start kicking in next year ie. MRT and LRT and also Eversendai has received new order books for steel fabrication jobs.
I think there is a element of nice roe profits will come about rather than extraordinary profits will be realised as these are the factors which the risk management or the capital efficiency side will meet their respective challenges.
Thanks once again for the good write up.
2016-09-10 10:28
Flying CRC Steel Producers: Fantastic Business Outlook & Insider's Look (Part 3)
http://klse.i3investor.com/blogs/wealth123/104163.jsp
2016-09-12 16:44
Hi Stockwatch, I think Part 3 have replied certain questions highlighted by you and below are reply from moneySIFU about the effect of weakening RM against USD:
Posted by moneySIFU > Sep 12, 2016 09:08 PM | Report Abuse X
It's double edged sword, lenglui, but seem CSCSteel benefited most from weakening RM while Mycron has been actively hedged its currency exposure, no so much gain or loss last year.
See table 6
http://klse.i3investor.com/blogs/wealth123/103812.jsp
2016-09-12 22:36
Extracted from the above: the selling price of the domestic CRC, which ranged from RM2068 to RM2,292 in 2015, are expected to be maintained or even possibly increased in coming months.
According to the source closed to the CRC industry, selling price of local CRC is moving upward to RM2,150 - RM2,200 in recent months.
http://klse.i3investor.com/blogs/wealth123/104163.jsp
2016-09-13 18:50
WealthWizard, the cost saving in raw material (HRC) at RM400-RM500 is confirmed, please refer to the following news:
According to Choo Bee CEO Mark Tan, Megasteel will normally charge RM400 to RM500 premium per tonne for HRC over international prices.
http://www.klsescreener.com/v2/news/view/81555
Thanks to Yoloooo for sharing above news.
2016-09-13 23:37
My new article:
EKOVEST: Doing Great & Ready To Shine, Are You Ready? (Part 1)
http://klse.i3investor.com/blogs/wealth123/104926.jsp
2016-09-23 11:37
China CRC price was RMB3,480 when my first article was published on 5/9/2016, now it is recorded as RMB3,597, an increase of 3.4%.
Bright Future for CRC Steel Producers: CSCSteel, Mycron, Eonmetal & YKGI (Part 1)
Author: WealthWizard | Publish date: Mon, 5 Sep 2016, 11:02 AM
http://klse.i3investor.com/blogs/wealth123/103741.jsp
2016-10-17 16:07
China CRC price continue to climb due to increase in car sales in China
2016-11-04 - 4013.33
2016-10-05 - 3508.89
2016-09-10 - 3485.56
2016-08-22 - 3421.11
2016-07-20 - 3111.11
2016-06-23 - 2950.00
http://www.sunsirs.com/uk/prodetail-318.html
http://www.100ppi.com/vane/detail-318.html
http://klse.i3investor.com/files/my/blog/img/bl2751_crc_price_in_china.jpg
2016-11-05 07:19
ha ha $$-sifu...i just explained why i think so on Part 2 of WealthWizard's publishing.
WealthWizard projection were indeed accurate...but the market dynamics were beyond anyone's prediction.
But..i think the market is now beginning to give Mycron to unleash its full potential soon.
2017-05-11 23:19
Interesting, need to study the figures again, thanks, probability, Mycron has been doing really well. Not only that, Masteel & SSteel too.
2017-05-11 23:21
Not forget your prestar, you have done really great in steel plays, be it first & second waves :)
2017-05-11 23:22
ha ha...i am still no where compared to WealthWizard..prestar is probably just luck...WW is way way ahead thinking...and he is a strategist.
sent you a mail..:)
2017-05-11 23:30
calvintaneng
Best of the best will be Masteel.
Masteel - the Master of Long Steel.
Long steel players are Annjoo, SSteel and Masteel.
All heavy infra project, towers, flyovers, tall tall structures and Mrt and Bullet Train structures need Long Steel bars.
2016-09-05 11:20