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Malaysia steel firms jump as govt frees up supplies

Reuters - Monday, May 12

KUALA LUMPUR, May 12 - Shares in Malaysian steel firms jumped on Monday, outperforming the broader market, after a government decision to free up supplies into the local market, which analysts said should benefit steel mills.

The government said on Friday it would scrap ceiling prices for domestically produced steel and also waive import duty as part of a market-liberalisation plan designed to ease supply shortages. The measures are due to take effect on Monday.

Kinsteel was up 3.2 percent by 0145 GMT, and Ann Joo Resource 2.1 percent, when the benchmark Kuala Lumpur Composite Index was up only 0.3 percent.

CIMB Securities said in a note that the opening up of the steel industry would benefit both the steel millers and steel users by creating a fairer and more transparent market.

Analysts said the relaxation of imports will address concerns on the shortage of some steel products, while creating a more competitive price environment, thus benefiting users.

Local millers, meanwhile, should benefit by increasing exports of steel billets and capitalising on the regional shortage, they said. "Given the backdrop of rising steel prices, very healthy global demand and industry expansion, we remain bullish on the steel sector," CIMB said.

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