Posted on 14 Sep 2016
Steel stocks rallied in active trade in an otherwise cautious market on Tuesday as speculators hoped Megasteel's suspension of its operations would benefit the smaller players.
At 5pm, the KLCI was down 9.26 points or 0.55% to 1,677.18. Turnover was 1.36 billion shares valued at RM1.51bil. Decliners thumped advancers three to one or 637 losers to 206 gainers while 316 counters were unchanged.
StarBiz reported that Lion Corp suspended the operations of the loss-making RM3.2bil Megasteel plant on Aug 30. Megasteel is the country’s first integrated steel miller, producing flat steel products including 3.2 million tonnes of hot rolled coils (HRC) and 1.45 million tonnes of cold rolled coils (CRC) per annum.
HRC is the raw material for CRC which is used in white good including cars. Industry experts say the current Malaysian market is flooded with imported steel goods, especially China, which is believed to be sold below production costs of the local players.
Melewar owns 71.52% of Mycron which produces CRC. Melewar jumped 14 sen to 54 sen with 36.38 million shares done and it was the most active stock, prompting a query from the Bursa Malaysia Securities over the unusual market activity.
Mycron rose 12 sen to 90.5 sen with 12.82 million shares done.
Malaysia Steel Works (KL) rose 5.5 sen to 79 sen, Perwaja added two sen to 12.5 sen, Hiap Tek Ventures added 1.5 sen to 29 sen and Kinsteel avanced one sen to 5.5 sen.
To recap, Megatseel is a 79%-owned subsidiary of Lion Corp Bhd and a 21.11% associate company of Lion Diversified Holdings Bhd. Both companies are controlled by Lion Group executive chairman Tan Sri William Cheng.
Apart from Megasteel, other steel plants of Lion Group, including Amsteel Mills Sdn Bhd and Antara Steel Mills Sdn Bhd, are believed to be still in operation.
