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Published on April 15, 2008

The company's operating profit in the quarter is expected to rise to Bt604 million, up 338 per cent from the previous year, said Ayudhya Securities.

After adding in a gain from foreign exchange, profit will rise to Bt984 million, an increase of 129 per cent year on year and 89 per cent quarter on quarter, the brokerage said.  

The average price of hot-rolled steel in the first three months of the year was Bt24 per kilogram, up 16 per cent from the previous quarter.

Meanwhile, the price of scrap also rose from Bt13-Bt14 per kilo to Bt16.

Ayudhya Securities said the firm projected to run at 80 per cent of its capacity and sell about 100,000 tonnes per month.

Kim Eng Securities said G Steel should continue to grow this quarter, but its profit will drop to Bt400 million-Bt500 million due to the surging price of scrap and pig iron.

Kim Eng said the steelmaker's profit in the second half would shrink considerably, as steel prices should be softer. It said skyrocketing steel prices in the first half were caused by speculation rather than raw-material costs.

Its opinion conforms with that of Chinese Mysteel, which said China's export price of hot-rolled coils would fall from US$950 (Bt30,000) to $700 a tonne in the next three months due to a global slowdown and a huge stockpile built up by traders.

Under this scenario, both Ayudhya Securities and Kim Eng have changed their recommendations on G Steel from "trading buy" to "hold".

Chalida Ekvitthayavechnukul

The Nation