KUALA LUMPUR, March 28 (Bernama) -- Bursa Malaysia closed lower today on profit-taking after a strong three-day rally, and investor sentiment was further shaken in the late afternoon session following news of an earthquake in Myanmar with tremors felt in neighbouring Thailand, said Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) slid 1.44 per cent or 22.08 points to 1,513.65, its intraday low, from Thursday’s close of 1,535.73. The benchmark index opened 4.16 points lower at 1,531.57 and hit an intraday high of 1,533.52 during the midday session. On the broader market, decliners outpaced gainers 563 to 395, while 408 counters were unchanged, 1,106 untraded, and 133 suspended. Turnover slipped to 2.25 billion units valued at RM2.13 billion from 2.52 billion units worth RM2.41 billion on Thursday.
Key Takeaways:
Steel Production Cuts: Several Chinese steel mills, including prominent players in Xinjiang, have started cutting production as part of a broader effort to address a supply glut and low profitability in the steel industry. Mysteel reported that four steelmakers in the region have reduced output by 10%, which began on March 25.
Limited Impact on National Output: Despite the cuts, the overall impact on China’s national steel production is minimal. Xinjiang’s steel output represented just 1.3% of the country’s total production last year. The reductions amount to about 2,000 tons of daily output in a nation that produces nearly 3 million tons of steel daily.
Government’s Role in Industry Adjustment: This production cut follows a pledge made by the Chinese government earlier this month to reduce steel output. The government aims to address the overproduction crisis that has been damaging the industry’s profitability and pushing for more sustainable production levels.
Market Reactions: While the cuts are not expected to significantly affect market supply, they are seen as a move to improve industry sentiment. Shares in Xinjiang Ba Yi Iron and Steel Co., part of the China Baowu Steel Group, rose by 7.5% following the announcement but later pared those gains. Meanwhile, iron ore futures in Singapore dropped by 0.9%, reflecting expectations of reduced demand for the key raw material.
Investor Insight: The steel production cuts highlight the challenges facing China’s steel industry, driven by overproduction and profitability issues. The government's actions to curb output may offer a temporary boost to industry sentiment, but the long-term effectiveness of such measures remains uncertain. Investors should watch for further developments in China's policy approach and how global steel markets react to these changes.
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