Group MD Tan said steel price fluctuations have little impact on the company’s business due to its focus on high-value downstream products.
PETALING JAYA: Pantech Global Bhd, en route to becoming Bursa Malaysia’s first Main Market listing of the year, plans to accelerate expansion and enhance operational efficiency, fuelled by the RM178.3mil it aims to raise from its initial public offering (IPO) on March 3.
The company, a wholly owned subsidiary of Main Market-listed Pantech Group Holdings Bhd
before the listing, manufactures steel pipes and fittings for fluid transmission across industries such as oil and gas, semiconductors and shipbuilding.
While its parent company, Pantech Group, carries over 100,000 stock-keeping units (SKUs), while undertaking large-scale projects in Malaysia and the surrounding region, Pantech Global operates with a more focused product range of under 5,000 SKUs and is more export-oriented.
It primarily supplies original equipment manufacturers (OEMs), project-based clients, distributors, and resellers.
Unlike conventional steel producers focused on upstream processes like iron ore and billet production, Pantech Global operates further downstream, where value addition is significantly higher, group managing director Adrian Tan Ang Ang said.
“When you talk about steel, you start with iron ore and scrap, which are made into billets, then wire rods and other basic steel products. But we go further down, to fittings. That’s why our value-added is more,” he told StarBiz.
Tan noted that while the business has higher conversion costs, Pantech Global’s products fetch higher selling prices.
A check on the Malaysia Steel Institute’s website showed that median steel prices in December 2024 stood at US$105 per tonne for iron ore, US$315 per tonne for scrap iron, US$492 per tonne for billet/slab and US$555 per tonne for steel bars.
In contrast, Tan highlighted that Pantech Global’s carbon steel fittings, which undergo extensive value-added processing, and are sold at US$1,600 per tonne.
This is due to the multiple processes involved, such as sawing, cutting and other treatments, he said.
As a result, Tan, who has been with Pantech Global since 2000 and oversaw its first factory opening, said steel price fluctuations have little impact on the company’s business due to its focus on high-value downstream products.
“Instead, we will look at the market demand,” he added.
Asked about rising costs and trade challenges after US President Donald Trump raised tariffs on steel and aluminum imports to a flat 25% “without exceptions or exemptions”, Adrian remained confident.
“We can always pass on cost increases to customers. If our costs rise, so do our competitors’. For example, with the 25% tariff in the United States, we are still able to sell at competitive prices because the entire market faces the same conditions,” he said.
Pantech Global currently operates two factories – one in Klang, producing carbon steel fittings, and another in Johor manufacturing stainless steel pipes and fittings.
Although the group’s factory utilisation hovers around the high 70s to low 80s, Tan said “on the site, we feel like we are running at full capacity”.
Tan said this is due to the nature of the business, where parts need to be moved between machines, despite equipment running continuously.
Pantech Global seeks to raise RM178.3mil from its IPO, with the bulk of the proceeds allocated for business expansion (RM67.3mil or 37.8%) and capital expenditure (RM64.7mil or 36.3%).
The remainder will go towards working capital (RM22.7mil or 12.7%), repayment of bank borrowings (RM15mil or 8.41%) and estimated listing expenses (RM8.6mil or 4.8%).
Part of the funds will be used to acquire operational facilities, including its Klang factory and Johor land, as part of its long-term expansion strategy.
“This will save us RM3.3mil annually in rental costs,” Tan said.
The company is also investing in automation and efficiency enhancements, such as a new pickling facility in Johor designed to handle 11.8m pipes.
Pantech Global’s pickling process is limited to 6m pipes, requiring double-dipping for longer lengths.
“With the new facility, we can process 11.8m pipes, which fit into a 40-foot container. This reduces labour from 35 to just five workers,” Tan said.
Pickling is a process where carbon is removed from stainless steel pipes using acid treatment after annealing and heat treatment.
The company is also acquiring new machinery, replacing conventional bandsaws with laser-cutting machines.
