Steel companies listed on the Stock Exchange of Thailand (SET) saw shares gain on Friday after Japan’s biggest steelmaker warned of higher prices to sustain its profit margins.
The gain was led by Thai-german Products Plc (TGPRO) surging 9 per cent from its prior closing by midday.
Tata Steel (Thailand) Plc (TSTH) rose by 7.5 per cent, while Posco-Thainox Plc (INOX) climbed 5 per cent.
Takahiro Mori, executive vice president of Japan’s Nippon Steel Corp, said that the company will need to pass on the sharp rises for inputs like iron ore and metallurgical coal promptly and fairly, according to a Bloomberg report.
“Otherwise our profits will be squeezed,” Mori stressed.
Analysts believe that the buzz in share price movement of several steel companies in Thailand is a result of speculation. They said the upcoming price hikes will boost quarterly earnings for those businesses.
However, as businesses across the world have been battling with a rise in commodity costs, the move by one of the world’s leading steelmakers would further put a strain on the auto and machinery industries.
“Although present steel prices have not risen, it is possible that prices will increase in the future,” said an analyst at Maybank Kim Eng Securities, pointing out that the gains in steelmakers’ share price could be just momentary.
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