Last year same quarter EPS is almost zero, so that’s easy to beat. Beside price, there’s volume that is not transparent. Scrap metal price increased by quite a bit and is trading in USD if i’m Not mistaken.
It’s really hard to say where it’ll go from here. Last quarter it built up its inventory, I wonder if it was meant to boost Q2’s performance. Also, share price is reflective of future prospects, less about what happened in the past quarter but not entirely independent.
In the end, whoever throws in sufficient money controls the price. Let’s hope it continues to move up steadily.
I don't have much details on scrap iron price. Just agak agak.
Jul 2017 scrap iron price is USD 280 per ton + processing fee to billets USD 90 = USD 370 per ton Early of 2018 think scrap iron price is USD 350 per ton + processing fee to billets USD 90 = USD 440 per ton Current price of scrap iron price is USD 310 per ton + processing fee to billets USD 90 USD 400 per ton
Jan to Mar 2018 report USD440 x 3.93 = RM1,729.20 let's say RM 1,684 since scrap iron price might around USD 330-350 Apr to Jun 2018 USD400 x 3.97 = RM 1,584.00
So scrap iron + processing cost to billet price is reduced by RM100.00 for this qtr.
Ssteel produce higher quality product of wire rod and steel bar, so in market this may fetch better price.
Jan - Mar 2018 average selling price 2,580 Apr to Jun 2018 average selling price 2,480 (maybe market price is around 2,380+-)
Average selling price is dropped by RM100 / ton offset against RM100 / ton dropped in scrap iron price.
Not sure this is ok or not, just agak agak. Anyway, margin is still there. Even 5% cannot be obtained, at least 3.5%-4% still have provided no other NCF expenses.
Regarding you said why this qtr easy to beat last year qtr, this mainly due to average selling price in market.
Apr-Jun 2017 ASP (not remember) maybe around 1900-200 Jan-Mar 2018 ASP 2500-2650 (price depend on quality and density) Apr-Jun 2018 ASP 2350-2480 (price depend on quality and density)
To me, when ASP dropped to 2000 and below, this might only just to cover COS. If above 2200, should have profit around 3-5%. If above 2500, should have profit 4%-6%.
Hari haji is next wednesday ... report think most likely out on next Tuesday evening .... Thursday think will have gap up ..... 2.20 should not be a problem .... buying this company is not because this qtr is because steel selling price now at high side till next year CNY and ssteel production at max side.
Before price push up to 2.00, better buy now. People may misinterpret .... given chance u to buy more.
Hi Windcloud, Miti weekly report has the scrap price. And I’d like to apologize here for sharing wrong info previously. I looked back and found that the scrap price peaked in Q1 2018 at around 380-410 USD. In Q2 it dropped to USD 340-370. It climbed back to USD 370-385 in July/Aug.
So the big unknown now is the volume...bringing this up again, ssteel previous QR recorded a significant increase in inventory. I hope it’s because they secured a big order where shipment/delivery took place in Q2.
warn3r, it is ok, no worry. Can I have the link of MITI weekly website for scrap price ? Appreciate you can provide the weekly report scrap price link.
https://www.lme.com/en-GB/Metals/Ferrous/Steel-Scrap#tabIndex=0 This is London Metal Exchange website, current market price for scrap steel is USD 303 per ton, not USD 370-385. The above computation I used LME/Singapore scrap iron price to work out, but since I not subscribed, so just agak agak. Another website actually want to refer is CIDB site, but dunno how come cannot access.
Anyway I need to tell you is the increase/decrease in scraps and selling price of steel products is co-related, so if scrap price increase, selling price increase and vice versa. Even not 100%, also got 90%.
One more thing need to show you is Graphite Electrodes price is decreasing. And wanna to tell you don't listen whatever people said, figures do tell you drop or increase.
Anyway, good to have discussion since I am not the person so keen to study, agak agak curi makan. Anyway previous large inventory balance is to mean also have good sales quarter this month, I trust the company has their pricing and purchasing strategy and this mean they will price in the scrap price up/down, even not to the fullest
The result is near the corner, don't wait until announcement only chase the price. Below 2.00 still a good bargain price. Historical highest price is 2.58, if TP is 2.50, at this current price of 1.88, u still have more than 30% gain. 1.88 is not at high side that will hit you down …… for this couple years, 1.80.- 1.90 quite the average buy price for most of the buyers. Johor have several high rise projects from China developers and local developers to support the demand of steel bar and wire rod which fetch a better price.
Lionind got impairment for this coming qtr, but my working on this impairment not sure is correct or not, it may turn out results not as you expected ….
Ssteel result think will perform better …..
Anyway it depend since end qtr result, difficult to estimate … but at current price, I will bet Ssteel since already gained from Lionind
Yup bad sentiment ... i also affected .... sad sad .... ssteel macam no support .... trade volume too thin ...
But hopefully tomorrow 1. Bursa index will inch higher and FF start buy back shares 2. After one day holiday .... people has clear mind and start to buy back steel counters since the cancellation of ECR not much affect on steel counters as the project may affect Alliance Steel company and certain company not supplied this cast iron 3. Steel selling price is still at high side
Ssteel as long result still within expectation and following results even can perform better .... wish share price to move towards 2.00 soon ..
For TA, 1.67 the lowest support that day is the support, it has tested 3 times to test the support between 1.60-1.68 level. If the support can hold well, and provided selling price of steel product is good and property/infra construction activities to support, price is should directional up.
For import tariff ended on 2020, I don't think it might end so soon, this may renew for another 3-5 years since Gvt having profit from tax from 2 portion - one from Steel company profit tax - Company tax 24% and import tariff on China steel products, so govt earn both side.
(A) Introduction The electric arc furnace method recycles used iron scrap by melting it in an electric arc furnace. It is the graphite electrodes inside the furnace that actually melt the iron. Graphite has high thermal conductivity and is very resistant to heat and impact. It also has low electrical resistance, which means it can conduct the large electrical currents needed to melt iron.
(B) Cost There are 3 different type of graphite electrodes (UHP, HP and NP).
For case study, I will use HP (high performance/high power) graphite electrode to study the cost % for steel making. 1MT of steel making requires about 0.3-0.4% or 3-4kg of graphite electrodes.
HP graphite electrode cost: At beginning of year 2018, it from about RMB79,000/MT rose to about RMB 119,000MT for Jan-Feb 2018 and then dropped to about RMB 69,000 during Apr-Jun 2018. So for this coming qtr the graphite electrodes cost is reduced as what I said in earlier post. http://www.chinaccm.com/27/20180508/272102_4871802.shtml
I will use diameter about 400mm to 600mm for the case study.
So the cost of HP graphite electrodes is RMB 69,000/MT x 0.62 = MYR 42,780/MT for Apr to Jun 2018.
Assumes revenue for this coming qtr is about 850,000,000 and the average selling price is about MYR 2,400/MT, then the sales volume will be 354,000 MT or 354,000,000 kg.
I had used previous year corresponding qtr result to compare and this had come a conclusion that when selling price is about 1,900-2000/MT then this is only to cover about the cost of sales. So assume the COS point at 1,950/MT. So cost of sales will be around 354,000 MT x 1,950 = 690,300,000.
So what is the cost % of graphite electrodes used ?
354,000 MT requires 1,062 MT graphite electrodes (354,000 x 0.3%). The cost in graphite electrodes is 1,062MT x MYR 42,780 = 45,432,360
The % of graphite electrodes is 45,432,360 / 690,300,000 = 6.6%.
(3) Is this correlation of graphite electrodes cost versus ASP of steel products
In conclusion: ASP: MYR 1,950 - 2,250 Graphite electrode cost % is about 2-3.5%
ASP: MYR 2,250 - 2,450 Graphite electrode cost % is about 5.5-7.5%
ASP: MYR 2,450 - 2,650 Graphite electrode cost % is about 9.5-11.5%
(4) Graphite electrodes cost trend
At current state, graphite cost will be around this level, but may inch higher towards year end or beginning of next year and this is in correlation to ASP of steel products.
WHAT I NEED TO SAY IS AS LONG ASP IS ABOUT 2,250 ABOVE THEN THERE IS A PROFIT WHEN SELLING PRICE IS ABOUT 2,550 AND ABOVE, THEN DAMN GOOD PROFIT FOR STEEL COMPANIES. BESIDES GRAPHITE ELECTRODES COST HAD BEEN REDUCED ABOUT 40% COMPARED TO 1ST QTR.
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Warn3r
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Posted by Warn3r > 2018-08-16 01:14 | Report Abuse
Last year same quarter EPS is almost zero, so that’s easy to beat. Beside price, there’s volume that is not transparent. Scrap metal price increased by quite a bit and is trading in USD if i’m Not mistaken.
It’s really hard to say where it’ll go from here. Last quarter it built up its inventory, I wonder if it was meant to boost Q2’s performance. Also, share price is reflective of future prospects, less about what happened in the past quarter but not entirely independent.
In the end, whoever throws in sufficient money controls the price. Let’s hope it continues to move up steadily.