Lee Metal Group

[Greenrookie]

The following statement from BRC Q3 announcement makes me believe that steel price do make a difference. It should affect Lee Metal too.

"Margins were relatively higher in 9M13 and 3Q13 due to lower steel costs as compared to the corresponding period in the previous financial year as the average cost of inventory was lowered by cheaper purchases due to declining steel costs while sales orders were secured at better prices."

I would consider those to be volatility related, ie change in prices. In this case, they benefitted from the volatility. I think even margins are a shortcut method to measuring competitiveness, think cost and gross profit per ton are better. Alas, I don't think such measures are provided thus we have to use margins.

I also believe sharp rise or fall are more detrimental to the business than absolute high or low price.Like shipping, such cyclical will survive normal market cycles as long as there is no prolonged fall in prices. I think the best situation is gentle increase in price, and ocassional corrections.

btw, to share a steel news:


Steel price on the downside as oversupply continues in China

http://www.steelguru.com/international_n...27202.html

---------------------------

Wonder when the demand returns to pre2008 levels?

I don't think it is going to happen any time soon. The steel situation in China is one of the reasons i still prefer arcelormittal. Rising shipping rates lowers the competitiveness of China's steel exports to the west. However, I think Lee Metal is experiencing a nice upsurge of demand for it's products. Will this last long enough for the investments in new capacity to pay off?

Looking at the private housing data,

http://www.ura.gov.sg/uol/media-room/new...-65e3.ashx

The number are going strong until 2016, total figure does not include a potential supply of 10,025 units from awarded Government Land Sales (GLS) sites that have not been granted planning approvals
yet as at 3Q2013, as well as Confirmed List sites from the 2H2013 GLS Programmes that have not been awarded yet.

HDB supply ramp up will taper off also after 2016.

The pie is there, and is not getting smaller at least till 2016, the question is competitors increasing??

The steel demand doldrum effective starts in 2009, and never really recovers since, it has been almost 5 years... will 2014 or 2015 be a golden year whereby Lee metals can fire on both cyclinders??

Just dreaming...
(Vested)