Strike while the Iron Is Hot

Stocks in steel sector are surging due to a sharp increase in global steel prices. Some are fundamentally goods, while the others may not.

Stocks in the steel sector used to be overlooked by investors in the Thai stock market due to their stable share prices and low trading volume, while some investors still remembered the time share prices made a sharp plunge to the point being traded in the last few years.

 

However, the steel sector has returned to investors’ focus in the last few months due to a spike in steel price. Hot-rolled coil steel jumped 48.26% in 2021 while China rebar rose 20.67% since January.

 

Even after the Thai Prime Minister gave an order yesterday to the Ministry of Commerce and the Ministry of Industry to take care of the fluctuation in steel price in fear of rising cost to Thai producers, resulting in a tumble in share price of related stocks, those same stocks came back roaring again yesterday.

The Association of Thai Steel Industries announced earlier yesterday that the group was expecting to submit a petition to the government sector, stating that the rise in steel price was in accordance with normal economic mechanisms in the global market as demand and cost of iron ore rose. The group also asserted that Thailand does not require importation of steel due to an oversupply in the country with a total production of 11 million tonnes per year of rebar, compared to a demand of 4 million tonnes per year.

 

All stocks in the steel sector edged higher during this period. Some stocks even surpassed its fundamental value due to being one of the steel stocks in the sector, thus, raised a question whether these stocks are fundamentally good or just being on the trend.

 

Posco-Thainox Public Company Limited (INOX) rose 6.20% in yesterday’s session while recording a 218% gain this year.

Tata Steel (Thailand) Public Company Limited (TSTH) rose 18.75% in yesterday’s session while recording a 240% gain this year.

TMT Steel Public Company Limited (TMT) rose 4.88% in yesterday’s session while recording a 79% gain this year.

G J Steel Public Company Limited (GJS) closed flat in yesterday’s session while recording a 206% gain this year.

Millcon Steel Public Company Limited (MILL) rose 1.61% in yesterday’s session while recording a 107% gain this year.

CSP Steel Center Public Company Limited (CSP) rose 0.77% in yesterday’s session while recording a 329% gain this year.

M.C.S. Steel Public Company Limited (MCS) rose 1.43% in yesterday’s session while recording a 9.23% gain this year.

 

Whether they are good or bad, surely, the current share prices are skyrocketing. The result in 1Q21 and 2Q21 earnings will show which companies are the real deal.

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