Sahaviriya Steel Industries Pcl, Thailand’s biggest maker of hot-rolled coils, led gains among steelmakers in Bangkok trading on expectation higher prices will bolster earnings.
Sahaviriya rose 4.2 percent to close at 1.74 baht, its highest level since July 6, 2005. G Steel Pcl, the nation’s second-biggest producer, jumped 10 percent to 0.44 baht, its highest close since Nov. 16. Bangsaphan Barmill Pcl climbed 8.3 percent to 1.57 baht. The benchmark SET Index gained 0.9 percent.
Steelmakers are passing on costs after Vale SA, the world’s largest iron-ore producer, scrapped a four-decade system of annual price-setting and boosted prices for Japanese steelmakers as much as 90 percent. Lakshmi Mittal, chief executive officer of ArcelorMittal, the world’s biggest steelmaker, said on March 31 that raw-material costs may push steel rates up 21 percent.
“Steelmakers’ profit margin will widen at the time of rising prices because their raw materials were bought at lower cost,” Adisak Prombun, an analyst at Trinity Securities Ltd. in Bangkok, wrote in a note to clients today. “Global steel prices will rise further with higher iron-ore costs.”
Thailand’s economic recovery will also boost steel consumption by about 18 percent this year, said Adisak, who ranked Sahiviriya as his “top pick” among Thai steel producers.