Posted by Albukhary > 2016-09-17 13:41 | Report Abuse

Good sharing. Thumb up!!

Posted by tempac > 2016-09-17 18:02 | Report Abuse

Good sharing, but if like that, why this four CRC players : CSCSteel, Mycron, Emetall and YunKong required by the Government to buy their HRC requirements from Megasteel?

http://www.kinibiz.com/story/corporate/2572/miti-to-protect-crc-manufacturers.html

Posted by FutureEyes > 2016-09-17 18:33 | Report Abuse

Two ways Government can protect Megasteel, one by quota of the raw material used by these companies and the other by the Duty on imported HRC. The latter strategy must have been more viable as it would be practically impossible for the manufacturers to produce product mix having compositions requirements as per the quota (ratio) accordingly.

I trust quota strategy did not work out and they relied on the Duty imposed. I am unable to find a clear guideline or confirmations on such quota in 2015.

Posted by confuse > 2016-09-17 18:58 | Report Abuse

Why must Megasteel closure help others and not themselves? If reopen back how?

Posted by confuse > 2016-09-17 19:13 | Report Abuse

Will there no steel supply interuption from Megasteel closure? No impacts on ongoing projects?

Posted by ronnietan > 2016-09-17 19:20 | Report Abuse

I couldn't find any ref from FutureEyes' link if CSC Steel produces iron-ore based CRC only, and not any scrap-based CRC.
In any case, there are now anti-dumping duties on CRC, which allows CSC Steel to obtain better prices for its CRC products, as shown in its June quarter results.

Posted by FutureEyes > 2016-09-17 19:40 | Report Abuse

Refer link below: A8 - Segment information (*)

http://klse.i3investor.com/servlets/staticfile/287473.jsp

*GALVANIZED STEEL COILS seem to be 100% of its products.

and referring to link below:

http://www.mycronsteel.com/chairmansmsg.asp

Extracted under Domestic CRC Structure:

The 'higher quality Iron Ore Based CRC', is used by downstream manufacturers, mainly involved in producing steel drums for the petroleum and palm oil sectors, in making components for the automotive industry, in producing steel sheets for color coating and GALVANIZING PURPOSES.


From above two information, i am unable to convince myself if CSC STEEL uses any Scrap based HRC.

Posted by tempac > 2016-09-17 19:51 | Report Abuse

If you say CSCSTEL just produces iron ore based CRC, then before MEGASTEEL closed, why CSCSTEL bought raw materials (scrap based HRC) from them?

http://www.kinibiz.com/story/corporate/2572/miti-to-protect-crc-manufacturers.html

Posted by FutureEyes > 2016-09-17 19:56 | Report Abuse

That was 2013...they might have changed their product mix considering which is more competitive (to avoid constraint imposed by high cost raw material from Megasteel), unlike Mycron who had procured the Steel Tube Segment ~ 2 years ago and did not have the luxury to do so.

Posted by FutureEyes > 2016-09-17 19:59 | Report Abuse

This also partly answers the reason for Megasteel's demise.

Posted by BLee > 2016-09-17 20:07 | Report Abuse

Petroleum industry? O&G at d moment downtrend. Could it b one of d reason of Megasteel closure?

Posted by FutureEyes > 2016-09-17 20:42 | Report Abuse

Major cost of production is Fuel. This is an energy intensive business.

Fuel is burnt to produce whatever heating requirement in the production process - smelting.

Fuel via a gen set is used to convert to electrical energy which drives all the machines in the HRC making. It takes a lot of energy to move & mold steels.

Despite the extremely low fuel price environment, if Megasteel is unable to pay the bills, i am afraid they never will.

Posted by Benjamin_8888 > 2016-09-17 21:42 | Report Abuse

Futureeyes lu sure bo major cost is fuel? haha

Posted by FutureEyes > 2016-09-17 21:51 | Report Abuse

Benjamin, that is true fundamentally in an overview. However, i am of the opinion they do not generate electricity by themself as it appears they have not paid the electricity bills. Electricity tariff is in theory related to fuel cost. But it all depends on government policy.

But i am certain fuel is the major cost for heat generation purpose. Perhaps you can enlighten me more.

Posted by Benjamin_8888 > 2016-09-17 22:34 | Report Abuse

Megasteel pakai electric arc furnace, x pakai fuel la boss

Posted by FutureEyes > 2016-09-17 22:46 | Report Abuse

Ok. Its EAF instead of BOF. Guess government policy did not help the lower energy (electricity) cost. Probably the China manufacturers are using BOF technology, and thus have the added advantage of lowering fuel cost. Thanks Benjamin.

Posted by Benjamin_8888 > 2016-09-17 22:55 | Report Abuse

maybe and thanks sharing your research, I will check with my brother on cscstel

Posted by FutureEyes > 2016-09-17 22:58 | Report Abuse

Really appreciate that Benjamin.

Posted by moneySIFU > 2016-09-17 23:13 | Report Abuse

Great write up & thank you for sharing, FutureEyes!!!

More & more good articles with different points of view, it proved we do not need to rely on so called experts from Newspapers & Investment Bankers.

Posted by probability > 2016-09-17 23:34 | Report Abuse

He left CHOO BEE so mysterious liao!..he he

Posted by chonghai > 2016-09-18 00:18 | Report Abuse

CSCSTEEL will definitely also benefits from closure of MEGASTEEL. As of February 2016 they still purchase from MEGASTEEL.

http://www.stockhut.com.my/news/89041

One of CSCSTEEL's bad quarter was due to inability of MEGASTEEL to deliver material on time.

Posted by FutureEyes > 2016-09-18 00:42 | Report Abuse

Thanks for the excellent info chonghai.

Posted by tempac > 2016-09-18 07:54 | Report Abuse

You are good, chonghai. Thumbs up.

Posted by moneySIFU > 2016-09-18 10:48 | Report Abuse

Thanks for sharing, chonghai, didn't see this old news but very useful.

Posted by moneySIFU > 2016-09-18 10:51 | Report Abuse

Sometimes one or 2 paragraphs in each news will give lots of hints or pictures about what's going on in the industry. What if read tens of these news? The whole picture will be shown in front of us and this will enable us to make better informed investing decision.

Posted by probability > 2016-09-18 11:58 | Report Abuse

Chonghai...u mean one of CSCSTEEL's better quarter results. I think its like when MEGASTEEL cannot deliver, they have excuse to source from China counterpart, China steel at cheaper international price.

Posted by Benjamin_8888 > 2016-09-18 16:21 | Report Abuse

thanks chonghai
futureeyes yes cscstel used to buy hrc from megasteel.

Posted by FutureEyes > 2016-09-18 17:03 | Report Abuse

thanks Benjamin. Any clue when they had stopped sourcing from megasteel this year?

Posted by chonghai > 2016-09-18 17:22 | Report Abuse

Probability, no. I am referring to a quarter where CSCSTEEL experienced a drop in revenue and the drop in revenue was due to MEGASTEEL not able to deliver material on time. Apparently CSCSTEEL did not mitigate with import but I do not know the reason behind.

Posted by Benjamin_8888 > 2016-09-18 17:50 | Report Abuse

futureeyes bro ur question very sharp.
chonghai, they r unable to do so at that time, compulsory to buy from mega.

Posted by FutureEyes > 2016-09-21 23:47 | Report Abuse

Choo Bee is just waiting to utilize its full Capacity

Posted by paperplane2016 > 2016-09-21 23:50 | Report Abuse

Many fund mgr know cscstel, not choo bee

Posted by probability > 2016-09-26 13:36 | Report Abuse

after Mycron...next Choo Bee?

Posted by probability > 2016-10-21 15:35 | Report Abuse

C - is definitely possible...

(C) Now let us see the impact on the bottom line for Mycron, by multiplying the throughput above of `73 ton/annum by the Savings of RM 250 / ton and the Tax rate of 25% to obtain: PAT of 18.3 Million per annum.

This translates to additional EPS of 5.0 cents on top of the normalized EPS of 22.4 cents based on the Projected next 4Q net profits of 63.3M by WealthWizard as per below article earlier:

Posted by probability > 2017-05-13 22:30 | Report Abuse

Estimate done by FutureEyes earlier should come to realisation soon.