PETALING JAYA: Cement corporations are anticipated to interrupt even in 2022, after 4 years of losses and when the majority cement common promoting value (ASP) is anticipated to rise above RM240 per metric tonne (MT).
In its current quarterly outcomes submitting, Malayan Cement returned to the black within the first quarter of 2021 following eight quarters of losses after benefitting from its ASP of RM210 to RM220 per MT, stated UOBKayHian.
“Attributable to motion management order (MCO) 3.0 being applied within the second quarter of 2021, we count on earnings to fall within the second quarter earlier than choosing up once more steadily from the third quarter onwards.
“We imagine the steady supply-demand dynamics for cement will present extra forecasting certainty as in contrast with metal, which is extra unstable pushed by numerous externalities, ” the analysis home stated in a report yesterday.
UOBKayHian stated metal corporations might proceed to report income within the second half of 2021, however with decrease margins.
It stated margins might be affected by subdued native demand, oversupply and easing of ASPs.
“Metal costs might have hit peak ranges given China’s plan to restrict its hovering commodity costs attributable to its carbon neutrality agenda.
“Since stockists have been stockpiling as they count on increased costs forward, we imagine demand will soften in coming months as orders are anticipated to taper off.”
As at June 4, 2021, UOBKayHian stated native metal billet costs stood at RM2, 750 per MT, whereas metal bar costs had been at RM3, 175 per MT.
“That is in tandem with China, the place the recent rolled coil value was RM3, 468 per MT, whereas the bar value hit RM3, 283 per MT.
“We imagine the robust ASPs have been priced in as most metal gamers are buying and selling at one commonplace deviation above their five-year imply.”
UOBKayHian stated it doesn’t count on the outlook for metal to enhance within the second half of this yr, because the section remains to be clouded by weak native demand and oversupply that has but to be addressed.
“On the home entrance, metal demand is anticipated to expertise gradual progress in 2021 as main metal crops face the affect of the ten% workforce restriction below MCO 3.0. Even when operations resume within the second half of 2021, utilisation charges might stay low as native demand is weak.
“A slowdown in mega and infrastructure tasks will certainly result in weaker metal consumption. The absence of trade consolidation and the presence of overseas rivals proceed to threaten native metal gamers’ progress.”
Moreover, UOBKayHian stated it expects utilisation charges to enhance within the second half of 2021, as financial actions slowly resume and building actions steadily restart as soon as Malaysia reaches its herd immunity goal by August of this yr.
“This may result in firmer bulk cement costs and act as the first driver of enhancements within the cement outlook, ” it stated.