CSC Steel to diversify its supplier base amid dynamic landscape

PETALING JAYA: CSC Steel Holdings Bhd aims to continue delivering high-quality products and services to its customers to establish a robust foundation in the dynamic landscape of the steel industry.

Group managing director Cho Chun-Yi noted, in its 2024 annual report, that the global steel market faces persistent obstacles, highlighting that the group has to deal with a volatile cyclical steel market in the short term.

“For the medium term, the annual steel production capacity in Asean and India is projected to increase 250 million tonnes by 2030, leading to intensified regional competition.”

Cho said the higher tariffs imposed on steel imports by the United States is expected to affect the dynamics of the global steel market, coupled with issues of carbon pricing, carbon taxes and carbon neutrality which he said would be a long-term key challenge.

Domestically, the group is hoping that anti-dumping investigations by the Investment, Trade and Industry Ministry on the imports of galvanised iron (GI) coils and sheets will result in the restoring of a fair market for local steel players.

The group is targeting to diversify its supplier base to reduce reliance on single-source raw materials and hedge against currency fluctuations through strategic financial planning.

By maintaining a robust net tangible asset position of RM2.44 per share and total assets of RM990mil as of Dec 31, 2024, CSC Steel is confident it is equipped to weather market volatility and fund its growth initiatives.

On top of that, it will also monitor global and regional steel market trends, adjusting its production and pricing strategies toremain competitive.

The group’s focus on high-value products and operational efficiency would help offset the impact of low-priced imports, while its strong governance framework would ensure agile decision-making in response to market changes.

Moving forward, CSC Steel is planning to prioritise the development of high-grade, high-value steel products tailored to meet the evolving needs of industries such as construction, automotive, and manufacturing as a strategy moving forward.

To achieve this, the group will continue to invest in upgrading its manufacturing facilities at its Ayer Keroh plant in Melaka.

Its 2024 capital expenditure of RM7mil for machinery revamping reflected its commitment to maintaining production excellence, and future investments would focus on adopting advanced technologies to improve product quality, increase yield, and reduce production costs.

By enhancing operational efficiency, the group is looking to counter the competitive pressure from low-priced imported steel, particularly following the expiration of GI anti-dumping duties in Malaysia in March 2024.

CSC Steel saw a difficult 2024, with its net profit dropping 31% to RM34.2mil, with revenue declining 2.9% to RM1.51bil, although the group said its commitment to delivering value for shareholders was evidenced by a proposal of a final single-tier dividend of seven sen per share for the year ended December 2024.

Additionally, its future plans include sustaining its dividend policy while investing in growth initiatives.

It said the proposed renewal of shareholders’ mandate for recurrent related party transactions, as outlined in the 2024 AGM notice, would ensure operational flexibility while maintaining transparency and fairness in dealings with related parties, such as parent company China Steel Corp.

Furthermore, the group is looking to improve the integration of digital tools into its business operations, from production to supply chain management, to boost efficiency and responsiveness.

Looking at its markets, CSC Steel’s market strategy is predominantly domestically focused, accounting for 96% of its sales, with the remainder exported to South-East Asia.

The group planned to deepen its penetration in Malaysia by strengthening relationships with key customers.

Regionally, it aimed to capitalise on the projected increase in steel demand in South-East Asia, by enhancing its export capabilities, targeting markets in Vietnam, Thailand, and Indonesia.