US inflation rate is now 7%. Most products' prices will go up soon. So the material prices will go up accordingly in a matter of time. So steel prices will go up too. When this happens, Lion Industries will be benefitted.
In an inflation environment, only the consumers suffer the most
Steel rebar futures fell to CNY 4,800 per tonne from a 16-week high of almost CNY 5,000 hit on February 11th, as demand from construction projects in China has not recovered yet following the Chinese New Year holiday and as production restrictions were still in place in North of China due to Olympics. Still, the steel is expected to resume upward momentum later in February as China’s government plans infrastructure investments in a bid to boost economic stability. .
The market could be waiting to be surprised by the massive contribution to be derived from the revival of Megasteel which will be the biggest steel player in Malaysia.
Lion is ridiculous under value, a cash rich company that never seen in Malaysia steel stock, and the largest flat steel player in Malaysia do deserve a premium but unfortunately the share price didn?t reflect the true value. Potential a good M&A play of its flat steel plant, potential a privatize candidate due to its cash rich position and low valuation.
KUALA LUMPUR: Domestic steel mills are adjusting prices due to the potential increase in commodity prices, as market sources say European long steel prices are expected to rise sharply in the coming weeks.
Asteel Group managing director Datuk Sri Victor Hii Lu Thian said domestic steel millers are also factoring in risks associated with the potential increase in domestic and imported inflation, increase in oil and energy prices and potential disruption in the global supply chain.
"Domestic steel bar manufacturers have no control over the rising steel prices
which has resulted in higher building material costs.
"The rising energy prices in Malaysia also exacerbate this.
"In 2021, there was a 64 per cent increase in natural gas tariff, coupled with a hike in global freight costs. Thus, the conflict has prompted many domestic steel manufacturers to rethink the sustainability of their businesses," he told The New Straits Times.
Victor said that domestic steel manufacturers are currently experiencing an excess of inquiries, but it is important to note that steel allocation in our country is limited.
"We find that the demand in Malaysia is merely spurred by earlier purchases by industry players, such as the construction and automotive industries, so it does not impact their budgeted costs that the global price hike may impact," he said.
Steelmakers across Europe are cutting back their operations as power prices surge to record levels in response to Russia's invasion of Ukraine, Bloomberg recently reported.
Producers of the metal from Spain to Germany are beginning to slow down or entirely stop their output as the higher costs make production unsustainable, even with steel trading near record levels.
Russia's invasion of Ukraine has exacerbated already eyewatering power prices, affecting companies including Acerinox SA, Salzgitter AG and Liberty Steel, it said.
When asked on the company's contingency plan if steel prices continue to soar, Victor said Asteel is taking a more cautious approach to the potential price avalanche to manage safety stock inventory levels better.
"We take this precautionary measure due to a lesson learned from the steel price crash in the year 2008.
"Similar to any steel player, the fluctuation of steel prices impacts us as it impacts our cash flow and also our stock prices.
"We are continuously assessing the impact on our product supply chains, including
surging shipping and insurance costs. To mitigate the situation, we are looking at
the possibility of alternative supply chain vendors to overcome these barriers," he said.
Leon Fuat Bhd executive director Calvin Ooi Shang How expect domestic steel prices to rise in tandem with markets overseas as there are knock-on effects from the disruptions to the supply chain in terms of raw material and logistics cost.
When asked if the rising steel prices will be potentially pushed to consumers, he said this depends on the industry and sector.
"If steel prices continue to rise in tandem with other costs, businesses will inevitably pass through the costs to consumers," he said.
Calvin said the strategy is to sustain the business and ensure that any price hikes are gradual and do not disrupt the company's operations and customers.
"We are working closely with steel producers to secure the supply needed at competitive prices to fulfil customer requirements," he said, adding that the company will continue to monitor purchases closely, including the foreign currencies critical to global commodity prices, which in this case is the US dollar.
Victor said currently, the direct impact is still minimal, but there is always the potential for immediate risk in the long run if the conflict continues.
"We believe that most domestic steelmakers have been cushioned with raw material stockpiling and diversified
procurement for now," he said.
Victor noted that the international price trend influences the trajectory of domestic steel prices, for example, trends in China will affect Malaysia as they account for more than half of global crude steel production.
"So far, our domestic steel bar prices have been below China's market price, but this may soon change as the conflict has rattled the global commodity market with ripples spilling over to logistics and freight costs, resulting in delays and higher operational costs," he said.
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
Report Abuse
Please Sign In to report this post as abuse.
Market Buzz
No result.
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: Carlo Rino Group Berhad, a leading fashion retailer of women’s handbags, footwear, and accessories, aims to list on the ACE Market!
MQ Trader 2020 views | 6 d ago
0:17
New IPO: A homegrown air fragrance company, Vanzo Holdings Berhad aims to list on the Ace Market!
MQ Trader 1700 views | 7 d ago
0:17
New IPO: Winstar Capital Berhad, a specialist in the extrusion of aluminium profiles and fabrication of aluminium ladders aims to list on the ACE Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
luckyman
723 posts
Posted by luckyman > 2022-01-17 21:39 | Report Abuse
US inflation rate is now 7%. Most products' prices will go up soon. So the material prices will go up accordingly in a matter of time. So steel prices will go up too. When this happens, Lion Industries will be benefitted.
In an inflation environment, only the consumers suffer the most