Malaysia-based CSC Steel Holding (CSCM) forecasts steel prices in Asia to remain high in Q4 and progressively enter a horizontal consolidation period amid lower exports from India and China as they focus on their domestic markets.
In Q4, the Malaysian steel market will continue to gain momentum and demand is expected to remain steady amid growth in the construction and manufacturing sectors. Steelmakers in China and India are focusing on their domestic markets, which reduced exports from these countries, and is supporting steel prices in Asia along with high iron ore price. The company expects steel prices to progressively enter a consolidation period. A further breakthrough in price is dependent on iron ore prices and the international steel market.
High iron ore inventories and uncertainty around winter production cuts in China and resurgence of COVID-19 infection, could impact economic activities and steel demand in Q4, globally.
Malaysia is challenged with a third wave of the COVID-19 outbreak, and the government has enforced restrictions in many affected areas. The company will focus on ramping production and ensure timely deliveries to end-users.
CSCM’s total revenues fell by 13.2pc to MYR306.8mn ($74.99mn) from the prior year quarter, due mainly to lower CRC sales volume and a reduction in the average selling price of products which was partially offsets by lower input cost. But the company’s pre-tax profit rose by 24.7pc to MYR15.9mn, from the prior year quarter on improved product mix amid a focus on higher-margin products. Compared to Q2, CSCM’s Q3 revenues rose by 152.7pc due to 165pc increase in sales volumes supported by improvement in customer demand and margins.
In the nine months (Jan-Sep) period, CSCM’s total revenue and pre-tax profit fell by 30.7pc and 48.4pc to MYR712.5mn and MYR17.9mn from the prior year period. The decline is attributed to pandemic-related restrictions from March to May, which reduced the company’s productivity during the period.