Pantech ... Focus On Stainless Fittings & RAPID Projects

Hit by double whammy of anti dumping duty imposed by the US and weaker domestic demand from the O&G sector, steel pipe manufacturer expects to rebound via project flow from RAPID.

The project flow in the domestic O&G market will improve in the second half of 2014 supported by RAPID.

It is believed that some 15% of RAPID’s total project value will be allocated to the installation of pipes, valve and fittings which is expected to benefit Pantech.

Pantaech is being a market leader in PVF and expect good revenue generation from RAPID.

Industry observers expect potential sales of rm3 billion accruing to Pantech from the RAPID project. Given that RAPID will be launched by Early 2019, expect contract flows of rm750 million per year for Pantech over years 2014 to 2018.

EPF had raised its stake to 5.34%.

For the first quarter of FY2015 its financial results continued to be under pressure from lower local sales at its trading division and lower export demand at the manufacturing division.

Revenue has yet to recover from the cessation of stainless steel exports to the US . However its new stainless steel factory grows out its gestation stage.

The US Department of Commerce started investigations in 2013 and anti dumping duties for exports of welded stainless steel pipes from Malaysia , Thailand and Vietnam were imposed in June 2014. The investigations and subsequent anti dumping duties hit Pantech’s stainless steel pipe volumes and the company had no sales of stainless steel pipes to the US in the second half of 2014.

That setback spurred the company to focus on stainless steel fittings in addition to stainless steel pipes. Since the final decision of the International Trade Commission in June 2014 which was not in its favor, Pantech has diversified its sales from pipes to the production of stainless steel fittings.

For FY2015 it is looking forward to an increased contributions from its subsidiary Pantech Stainless & Alloy Industries Sdn Bhd buoyed by its production focus on stainless steel fittings.

Pantech has been producing more fittings since anti dumping duties were imposed on stainless steel pipes. Though it was not able to compensate fully for the loss of revenue from the sale of stainless steel pipes, the fittings have better margins.

Pantech’s stainless fittings are finding market acceptance overseas, with 70% of its production exported compared with only 40% of its fittings exported in FY2013.

It is actively exploring potential export markets for stainless steel products in South American and Europe .

The revenue ratio between trading and manufacturing was 54:46 in FY2014. It is moving towards 50:50 revenue ratio by 2015.