Steel Product is a common wording, it basically come in two form ie Long and Flat product, Steel products can also be divided by their shapes and related applications: Long/Tubular Products include bars and rods, rails, wires, angles, pipes, and shapes and sections. These products are commonly used in the automotive and construction sectors. Flat Products include plates, sheets, coils, and strips. In this article, we are concentrate in Long/Tubular Steel product particular on pipes, angle shape and section product. The company fall in this categories will be Hiap Teck, Choo Bee, LSteel, Melewar, Prestar etc.
In 2019 and 2020, global steel demand is expected to continue to grow moderately in tandem with a slowing global economy. Uncertainty over the trade environment and volatility in the financial markets could pose downside risks to this forecast.
In Malaysia, the apparent steel consumption (ASC) registered a growth rate of 3.5% from 9.44 million MT to 9.80 million MT during 2018. Consumption of long products registered a much smaller growth of 0.15% when compared to flat products growth of 7.97%. Overall, long products consumption still dominate over flat products at a ratio of 55:45 vis-a-vis last year’s 57:43. Construction sector by far remains the foremost consumption channel, constituting about 70% of total usage.
The construction sector in Malaysia, however, only registered moderate growth of 4.2% in 2018 sustained mainly by the civil engineering sub-sector which saw a steady progress of large petrochemical, transportation, and utility projects. The reinstatement of infrastructure projects such as East Coast Rail Link (ECRL) and mega development Bandar Malaysia would provide optimism to the local steel industry towards the final quarter of 2019 and year 2020. Steel being the raw material used in construction sector is expected to rely on the progress of these infrastructure projects.
We are expecting an expansionary budget 2020 on coming 11-10-2019 focusing on sectors, initiatives, and measures that will protect growth-enhancing spending and investment. It is due to we are facing high and rising risk of a global recession going into 2020, with Malaysia experiencing a moderation in real gross domestic product growth at a projected 4.5% versus the 4.7% estimated expansion for 2019. The Budget 2020, which is the final budget under the nation's five-year Eleventh Malaysia Plan which outlines the country's economic growth plan between 2016 and 2020. The Budget 2020 will manage trade-offs between supporting domestic demand, protecting social spending, and ensuring the optimal mix of spending depending on sector-specific requirements.
The Budget 2020 will introduce mini fiscal stimulus package could amount to RM3 billion or 0.2 per cent of gross domestic product (GDP), while likely in the form of higher development expenditure.
The new Harapan government has full planning and implementation in their Second Budget during in full power. The 2019 Budget is only partially budget by the pakatan Harapan take over Putrajaya on 509. The expansionary Budget 2020 will spur the economic growth in 2020 and further enhancing the deteriorating business environment locally. The building material sector is inevitably benefit from the revival of big scale infrastructure work.