PETALING JAYA: The outlook for the domestic steel sector should be brighter going forward as the slump in the industry has bottomed out following losses of about RM485.9mil in the first quarter and even more in the fourth quarter of last year, analysts said.
The worst is clearly over for the steel industry and earnings are expected to stage a strong turnaround in the third quarter of this year, according to AmResearch senior analyst Mak Hoy Ken.
Most steel mills continued to be in the red in the quarter ended March 31, 2009.
However, Mak noted that the quantum of losses for players such as Ann Joo Resources Bhd, Perwaja Holdings Bhd and Southern Steel Bhd had been reduced substantially in the absence of further write-downs in the value of their inventories.
Prices of long steel products (used for construction works) rebounded by 25% to RM2,000 per tonne currently from a low of RM1,600 per tonne in April.
It peaked at RM4,000 per tonne in mid-2008.
Credit Suisse said in a note on Wednesday that steel prices would be on the uptrend as a result of the Government’s pump-priming initiatives.