Solid Horizon Hedged Against Steel Price Volatility
KUALA LUMPUR (31 March 2021) – Despite the volatility in steel prices throughout 2020 and the first half of 2021 that continues to affect companies with a core business in steel trading, Solid Horizon remains optimistic of its performance in the local Malaysian market due to its effective hedging against uncertain market conditions.
According to James Yeoh, Director of Solid Horizon Sdn Bhd, they haven’t experienced any losses from the effects of the volatile steel prices because the company buys shipping containers at low prices and if need be, breaks them down and sells the steel cores at high prices, netting a profit.
“We usually buy a lot of steel and shipping containers for a low price during the market downturn and when the market price is high, if need be, we sell,” he says.
Solid Horizon is a Malaysian supplier and manufacturer of shipping containers. Since 1994, they have specialised in portable cabins, heavy duty cabins, labour quarter cabins, toilet cabins, guard houses, used containers and polyurethane cabins.
James adds, “It’s a good business modal to keep our company afloat during difficult times like a shortage of shipping containers, high steel prices, the Covid-19 pandemic and other disruptive market forces. For instance, let’s say I own roughly 200 units of shipping containers which I purchased 10 years ago. I can convert them to steel cores and sell them. Obviously it’ll give me a higher return compared to when I first purchased them, so when the iron price goes up, steel prices will follow suit along with shipping container prices. It’s one way we stay bullish in the market.”
However, James adds that he avoids this short profit tactic because it disrupts the market and it’s not healthy for his customers.
“Currently, the supply of steel in the market is low but demand for it remains high causing prices to increase. This in turn affects other raw building materials, which in turn affects the construction industry, which we are also part of. By pushing higher prices to our customers, we lose out on volume but gain on margin. We’re a long term player in the industry, so volume is our main priority.” James explains.
He adds, “We advise our customers to avoid trading steel or buying shipping containers when the prices are high and patiently wait for better days. We have a civic duty to our customers to inform them when’s a good time to purchase shipping containers and when it’s not. Profit will come if we stay honest and look out for the wellbeing and best interest of our customers.”
When asked if the Suez Canal blockage had a role to play in the rising prices of steel, James says that prices have been on the rise since 2020 without a downturn despite us passing the holiday seasons, but the Suez Canal incident didn’t do the market any favours.
“Normally, we expect prices of shipping containers to increase by year end due to the high volume of import and export during the holiday seasons like Christmas and the New Year and then prices could start dipping closer to March. But due to the Suez Canal incident, there’s a shortage of shipping containers which are driving the prices up and despite container carrier ships now able to sail through the Suez Canal, it could take weeks or so before they dump their cargo. We can be looking at months before the prices start to stabilise, and even then, they won’t dip as low as previous years.” James concludes.
For companies seeking shipping containers for various purposes, they can contact Solid Horizon, a Malaysian manufacturer and supplier of cabins and containers. Visit our website here or email us at solid@sh.engimedia.com.my and call us at 03 3396 3888.
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