Leader Steel sees 20% growth in Q2

BUKIT TENGAH: Leader Steel Holdings Bhd expects its second-quarter results to improve by at least 20% over the first quarter 2016 and the same period last year.

Group managing director Datin Tan Pak Say said the increased in sales was usually between 5% and 10% per quarter but due to the shortage of hot and cold-rolled raw materials, the demand had “surged”.

There is a shortage in the market today for such raw materials because Malaysia had imposed anti-dumping duties on steel coil product such as hot-rolled coil (HRC) and cold-rolled coil (CRC) from China, Indonesia, and Vietnam.

“In the country, you can only source steel coil products from maybe three to four players in the market. But the supply is very limited because some of the local steel coil re-rolling mills are exporting their products,” she added.

HRC products are used to make structural steel while CRC for thinner steel used in the furniture industry, according to Tan.

The current price of HRC and CRC is about 30% more than from two months ago.

Hot-rolled pipes are selling around RM2,850 per tonne, while cold-rolled tubes at about RM3,100 per tonne. “Our selling price of steel pipes and tubes have increased at least by about 30%-35%,” she added.

Moving forward, the group had recently invested about RM2mil in a new production line for its plant in Bukit Tengah to increase monthly output by more than 10%.

“This increase in output should help the group enlarge its market share in the country. Leader Steel’s steel pipes and tube products are sold to hardware wholesalers in Malaysia,” she added.

According to Tan, the price of steel coil products imported from Taiwan and Japan is expected to rise by 8% to 10% in July and August due to the shortage in the Asia region.

“In the fourth quarter, the pricing is expected to stabilise as the shortage situation will improve,” she said.

On the mineral trading business, Tan said the group expected the contribution from the segment for 2016 to be around 30% to 35%, as the price of mineral had improved significantly early this year.