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STEEL INDUSTRY

The steel market has been beaten down in the past reaching its 5 year low.

The main cause would be:

1. Steel Dumping from China

2. Cancellation of Major Projects by new government.

3. Global decrease in demand. (ASC) Apparent Steel Consumption has been on decline in the past. 

Would the landscape be changing soon.

The re-ignition of any Blast Furnace would probably be a sign of clear path.

(blast furnace are difficult to start and stop and once started would burn continously for long periods.)

clearly those in the industry won't start up a blast furnace without and increase in thier order book.

Local steel in the past had few issues.

1. Overcapacity in the global steel industry

2. Low productiin capacity utilization rate.

(below 80% which is industry standard) 

Currently:

 long product ASC 56.7% 

 Flat product  ASC 43.3%

But what have changed to clear the sky for steel sectors:

1. China has agreed to cut production.

2. Malaysia has imposed an antidumping law. (China Steels are for export only)

3. Restarting of mega Project ECRL

SWOT

1. Minimum wage..

2. Stimulate steel usage locally

3. Reducing electricity tariff. And natural gas

4. Moratorium on new lisence and cancel old non implemented  lisence

Furnace.

Blast furnance

~ will have better competitive edge than an EAF in the long run.

(electric arc furnace)

~more capital intensive.

~ steel making cost composition include raw material is 25% lower then EAF

~ BF uses 95% iron ore and 5% steel scrab

~ EAF uses 100% steel scrap.

~ EAF more flexible and cost effective when demand drops. (where as BF would incur most cost during low demand period)

Who is who in the industry :

*Long steel* : billet, bars, beams, iron bar, rebars, wire rods. 

Moved by construction and civil engeneering 

~*Masteel, Annjoo, Southern Steel, Aliance Steel*

Flat Steel: slabs, hot roll coiled, clod rolled coiled,

Mainly used as raw material in downstream application. 

Moved by Manufacturing, Automative, Machinery + Equipment, Oil & Gas.

~*Mycron, CSC, YKGI, Eastern Steel, Lionind*

Specialty.

1. Eastern  steel : sole producer of steel slab

2. Annjoo : Hybrid BF~EAF

3. Masteel : major long steel player, new technology acquired, also involved in PET scan tech.

4. Lionind : major crc player.

5. Alliance Steel :may be most efficient but China owned and probably for export market and not domestic.

Source: The Edge, Misif, www.Steelonthenet.com