KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) made a firm turnaround with net profit of RM32.5mil in the financial year ended Dec 31, 2021 (FY21) from net loss of RM14.7mil a year ago, buoyed by the recovery in selling prices of steel products in local and international markets.

       Its revenue in FY21 rose 14.2% to RM1.6bil from RM1.4bil in the preceding year, bolstered by the Malaysian market where sales rose 15.8% to RM1.4bil from RM1.3bil previously on stronger demand from the construction sector.

       Export sales remained stable at RM136.1mil in FY21, versus RM137.3mil a year ago.

       In a statement, managing director and CEO Datuk Seri Tai Hean Leng remained upbeat on the group’s prospects, particularly as the stronger demand for steel from the accelerated pace of economic activities globally were expected to overshadow the impact of uptrending raw material prices.

       The ongoing conflict in Eastern Europe is not expected to have any impact on the group’s earnings.

       Prices of iron ore, a primary raw material for blast furnace-based steel making which is a bellwether for steel demand, rose from a low of US$85 per tonne in November 2021 to more than US$150 per tonne on Feb 11, 2022, before settling at US$143 a tonne in the fourth week of February 2022.

       At the same time, price of metallurgical coal, which constitute approximately 40% of blast furnace cost of production has remained high year to date.

       “This strong turnaround is made even more significant against the backdrop of the disruptive Movement Control Orders in FY2021, and showcases our resilience. We are also reaping the benefits of the timely upgrading of our steel making facilities.

       “Although prices of raw materials are increasing, the greater force of external demand is widely expected to eclipse the high-cost environment. North Asia’s commencement of the civil construction period in the spring, together with the lifting of restrictions of steel mill activities in China, are already prompting a strong rebound in domestic and international steel prices,” Tai said.