Government works to promote recovery in the steel sector was revised to short-term buy

In view of the Government will vigorously promote the construction in 2010, as well as stimulate the economy and supporting the various works, therefore, analysts believe that this will certainly be able to iron and steel sphere into the road to recovery, two pairs in the field rating from "neutral" was revised to "short-term buy."

CIMB Investment Research analyst pointed out that in the past few months, can be signs, such as economic growth, construction and manufacturing recovery in steel demand to see a gradual return to warm message.

He said: "The Government first met in November 2008 and March 2009 to launch two worth 67 billion ringgit package to stimulate the economy, while in the past few months about the construction activities to stimulate the economy and supporting the news are very good, therefore, we expect the construction sector will grow 2.6% this year, next year's growth will increase to 4.0%. "

He revealed that, in addition to the construction sector, the manufacturing index also showed that the manufacturing sector in the past 5 months to obtain a monthly rise.

He said: "In addition to the region beyond the package to stimulate our economy, our country there are up to 76 billion ringgit of the large-scale projects yet to be conducted, which the steel sphere is a good omen, should be able to make demand for long steel products to re - the rise. "

Long steel products began back in April Young, followed by flat steel products are also in July to improve, so analysts believe that China's serious economic contraction has bottomed, and is expected to move towards stability and recovery.

Malaysian economy bottomed out

He said: "Since the fall of steel prices in Late last year, after, and now has been in a rising trend; exports have rebounded, and in most of the month, its performance was beyond the 2007 and 2008 levels."

In addition, analysts pointed out that despite a long steel manufacturers in the second quarter of this year, been successful in reducing losses, but they are still in the first half of this year, make ends meet dilemma.

"Therefore, we believe that most of the iron and steel manufacturers should be using their high-priced scrap metal inventory can be seen from the iron and steel plant in the fourth quarter of 2008, a large number of write-down of inventory reflected.

"From this trend, coupled with the steel demand is rising, export orders for more, as well as steel prices rise, steel companies in the second half of this year's performance should be better, and more iron and steel factory owners to switch from the third quarter of losses for the surplus. "

Analysts believe that the steel industry was the catalyst for re-evaluation include: to stimulate economic package pushed up demand for steel, start large-scale construction projects, as well as the 2009 changes in the second half of the potential benefits.