“The market now seems favourable. Steel players are making profits. China’s move to cut capacity bodes well for the industry as it stabilises steel prices.”
FOO KOK SIEW, Hiap Teck executive director
WITH the steel industry heading towards an upswing in the near term, mainly due to the favourable exchange rate and stable steel prices, Hiap Teck Venture Bhd expects to return to profitability in the 2018 financial year.
“The market now seems favourable. Steel players are making profits. China’s move to cut capacity bodes well for the industry as it stabilises steel prices,” said Hiap Teck executive director Foo Kok Siew after the company’s annual general meeting in Setia Alam yesterday.
China, the largest steel producer in the world, has reduced steel production and closed induction furnaces.
Following the move, steel prices have surged and this has largely benefited steel players, marking an improvement from the earlier years of depressed prices due to the influx of cheap imports.
On the ringgit, Foo said the local currency was strengthening and this was positive for the steel industry as it would cut down foreign exchange losses.
Hiap Teck registered a net loss of RM102.98 million in the 2017 financial year ended July but turned profitable in the first quarter ended October of the 2018 financial year, posting a net profit of RM16.04 million.
Foo believes the company will remain profitable, supported by its 55 per cent-owned Eastern Steel Sdn Bhd, which will resume operations next year.
Eastern Steel, a joint venture between Orient Steel Investment Pte Ltd and Chinaco Investment Pte Ltd, had suspended operations in October 2015 due to difficult market conditions.
The facility has a blast furnace and a slab-making capacity of 700,000 tonnes per year.
“We are going to be profitable this financial year based on the current environment. We are in advanced stages of resuming Eastern Steel production after taking into account the market conditions,” he said.