Company
Profile
  Guarantor
Form

    News & Events

    Lower prices seen for cement and aluminium

    01 Jan 2019
    PETALING JAYA: The cutback in public infrastructure spending, coupled with the sustained weakness in the property sector, will have a direct knock-on effect on the demand and hence prices for steel and cement, says AmInvestment Research which has downgraded the building materials sector recommendation to “underweight” from ‘neutral’.

    It said that locally, for the steel sector it does not see a lift from China as a production cut will be matched by a corresponding decline in consumption in China. Meanwhile, the demand-supply dynamics for aluminium appears to be even weaker than steel with production in China expected to outstrip demand, it said in its sectoral report.

    “We project steel bar prices to average at RM2,380/tonne in 2019, which is comparable to an average of RM2,400/tonne estimated for 2018. Industry experts forecast steel production in China to ease by 2.8% in 2019 and 2.2% in 2020 stemming from the removal of highly-polluting and inefficient obsolete capacity from the system.

    “However, this is not expected to push up the steel price as China’s steel consumption is projected to correspondingly fall by 2.0% in 2019 and 2.3% in 2020 on the back of a slowdown in its GDP growth,” it said.

    China is the world’s largest producer and consumer of steel.

    As for the average cement price in Peninsular Malaysia, the research house expects it to fall by close to 20% to RM190/tonne in 2019 from RM235/tonne estimated for 2018.

    It projects cement consumption in the peninsula to weaken by another 6% to 15mil tonnes in 2019 (following an estimated 6% and 8% decline in 2018 and 2017 respectively) amidst the further slowdown in both the local construction and property sectors.

    “Meanwhile, we believe the cement market in Sabah and Sarawak, which is less crowded, to remain relatively stable.

    “We forecast the average aluminium price to ease 5% to US$1,900/tonne from US$2,000/tonne estimated for 2018,” it said.

    The research house said industry experts project aluminium consumption in China to grow by a healthy 5% to 38.3 million tonnes in 2019 (from 36.5 million tonnes estimated for 2018), largely backed by the growing automotive and aircraft manufacturing industries.

    However, during the same period, aluminium production in China is anticipated to outstrip consumption, rising by a faster rate of 8% to 40 million tonnes (from 37 million tonnes estimated for 2018). Similarly, China is the largest producer and consumer of aluminium in the world.

    “We may upgrade our ‘underweight’ call on the sector to ‘neutral/overweight’ if the government decides to pump prime the economy with public projects in the event of external shocks such as an unexpected slump in the global economy, resulting in higher demand and better prices for building materials; and if China decides to expedite the removal of obsolete steel and aluminium producing capacity in the country,” it said.

     
     

     

     
     
     
    Source from: https://www.thestar.com.my

    Call Us

    +607-861 6201/ +6011-5501 6392

    Send an Enquiry

    enquiry@zoomsteel.com.my

    Address

    Locate Us

    Lot 1515, Batu 14 1/2, Jalan Sungai Tiram, 81800 Ulu Tiram, Johor, Malaysia


    View Map

    We promise to give you the best services.

    Once receive your call, we will straight away start our job and will finish our job to meet the deadline.
     

     
    Call Us Now
       
    Talk To Us Now