Leader Steel expects higher demand for its products
Group MD says business likely to pick up in the second half
BUKIT TENGAH: The demand for Leader Steel Holdings Bhd’s steel products has grown by 18% in the first quarter of this year compared with the same period in 2017.
Group managing director Datin Tan Pak Say told StarBiz that based on the present market price of hot rolled coil (HRC) that is about US$680 to US$700 per tonne, the value of the increased output translated to about RM50mil compared with the corresponding quarter of 2017.
Leader Steel uses HRC as its core raw material. The price of HRC was about US$560US$580 per tonne previously.
“So far we have delivered more than 80% of the output to the construction and the industrial sectors. Although the price of steel per tonne has increased, we expect the margin to contract slightly this quarter due to price pressure,” she said.
On the expansion of its Kapar plant, Tan pointed out that the group was still studying the proposal to double production capacity to meet the needs of the company’s customers in the central and southern regions.
The price of steel and HRC should continue consolidating at current levels, according to Tan.
“We expect business in the second half of the year to pick up after the Hari Raya festive holidays, following past years’ trend,” she said.
Tan said the Malaysian Iron and Steel Industry Federation has projected a bright future for the local steel industry thanks to increased domestic demand, recovery in product prices and trade remedies by the authorities.
“The local steel business has improved over the past three years after having faced extremely low pricing in 2015, when China was dumping its steel products overseas.
“The situation in China has corrected and there has been a decline in steel production in that country.
“The China steel prices improved and the domestic market is now absorbing the locally produced steel,” she said.
For the 2017 fiscal year ended Dec 31, the group posted RM9.28mil in net profit on the back of a RM243mil turnover compared with RM9.7mil and RM167.3mil achieved in 2016.