PETALING JAYA: Malaysia Steel Works (KL) Bhd (Masteel), which reported a net loss for its first quarter ended March 31, 2015, is expecting lower steel bar supply from China due to tighter government controls on imports.
The company told Bursa Malaysia yesterday that the Government had levied a 5% import duty on all carbon steel bars and wire rods effective June 11 and there would be RM50,000 fines for any usage of construction material not certified in accordance to the Construction Industry Development Board (CIBD) Act starting from June 1.
Despite the long-anticipated policies that would help reduce steel imports from China, Masteel said the second half of the year would be challenging because the large overhang of cheap imported steel products from the first half would continue to weigh on local steel prices.
It added that the implementation of the goods and services tax (GST) and the Hari Raya Aidifitri holidays would dampen local demand for steel, and the increase in natural gas prices and weakening of the ringgit had caused escalation in cost of production.
“To improve the company’s financial position, the company is diligently focusing on the completion of its new 200,000 tonnes per year premium steel bar rolling mill at Bukit Rajah, Klang, and expects the new plant to generate significant contribution to the bottom line of the company once it is fully commissioned by 2016,” it said.
Masteel recorded a net loss of RM10.71mil in the first quarter of financial year 2015 from a net profit of RM7.28mil in the same period a year ago due to lower sales volume and margin.
The steel bar and billet manufacturer’s revenue for the quarter fell 4% to RM325.4mil from RM337.7mil a year ago.
Meanwhile, in a separate filing, Masteel has appointed Roy Thean Chong Yew as its new audit committee chairman, replacing Lim Hoo Teck who has resigned as a director.
Thean, 43, is also appointed as a member of the remuneration committee.
On Masteel’s joint venture with KUB Malaysia Bhd for the proposed RM1.23bil inter-city rail transit system project in Iskandar Malaysia, the company said KUB had announced its intention to consummate the memorandum of understanding signed in 2011. But it is subject to its investment committee’s review in due course.
“The management continues to work with the relevant parties including government authorities pertaining to the proposed Iskandar Malaysia Commuter rail project,” it said.