Too early to assess impact of new hardware developed by MIT on local steel players – analysts

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KUALA LUMPUR (February 15): It is too early to assess the impact of the new material developed by the Massachusetts Institute of Technology (MIT), described as “stronger than steel but as light as plastic”, on steelmakers local.

A team of chemical engineers from MIT said they recently developed a new material that can be easily produced in large quantities.

It is a two-dimensional polymer that self-assembles into sheets, unlike all other polymers that form one-dimensional spaghetti-like chains.

The researchers found that the new material’s modulus of elasticity – a measure of the force required to deform a material – is four to six times greater than that of bulletproof glass. They also found that the yield strength, or the force needed to break the material, is twice that of steel, even though the material is only about one-sixth the density of steel.

Although this is a groundbreaking discovery, UOB Kay Hian Securities (M) Sdn Bhd said this development is still in its infancy and may take some time before this new material can be mass-produced and used commercially.

“Historically, for new research and innovations to be commercialized and gain significant market share across the world, it takes at least 50 to 100 years.

“I believe that even if this new material were to be introduced to the market, it cannot completely replace steel as a whole, especially as a building material in the construction industry. Rather, it may find its use more relevant for other things like protective coating for phones or car parts,” UOB analyst Noor Hazmy Noor Hazin said in an email response to The edge.

According to him, there have been attempts to find substitutes for steel, such as aluminum, wood, stone, concrete, etc., but steel remains relevant all these years.

“Steel still remains relevant in these years as industries like construction still prefer to use it as one of the main building materials due to its unique properties – its strength and elongation, its malleability, its non-flammability and its recycling, etc.

“Furthermore, the steel also went through [on top of ongoing research] various new product innovations and improvements in the steel manufacturing process to make it a much better product, low cost and environmentally friendly at the same time.

“Steel is a multi-trillion dollar industry that has been around for over 100 years. It is deeply rooted in many industries (construction, engineering, etc.) in various supply chains (iron ore, coal, scrap metal and others) around the world. Therefore, I think it’s not economically viable to completely replace steel, at least not in the near future,” Hazmy said.

Meanwhile, Choo Swee Kee, chief investment officer of TA Investment Management Bhd, said The edge there will be an impact on steel demand if the new material developed by MIT proves to be superior.

“However, as with any new material or product, it will take time to gain widespread acceptance. There are many other considerations when introducing new materials, such as cost, ease of use, resistance to heat, sunlight and UV rays, rain, et cetera,” Choo said.

Difficult outlook for steel, but demand expected to increase in 2022

UOB’s Hazmy expects local steelmakers to still be profitable in 2022, but with lower margins as average selling prices fall, transportation costs rise and raw material prices rise .

In Malaysia, Hazmy said, local demand is slowly recovering as construction activity picks up with the easing of the movement control order, but remains weak without any major pump priming activity from the side. of the government.

“As the oversupply situation in the local steel market persists, I believe that some steel companies will continue to export their products overseas to capture the growing demand in the regional market. As China aggressively limits its own steel production to achieve carbon neutrality by 2060, it will need to increase its steel imports to meet the country’s economic growth, given that China is the largest producer and steel consumer in the world. Ultimately, this could benefit steel players in Asia, including Malaysia.

“However, I think global steel prices may have peaked given China’s plan to limit its raw material prices as part of its carbon neutral program. As such, I expect local prices to gradually decline going forward but still remain strong (above the historic range of around RM2,300/mt) as demand increases locally and regionally,” Hazmy said.

The analyst said the UOB has a “pending” call for Ann Joo Resources Bhd and Choo Bee Metal Industries Bhd.

“They are currently trading close to our target prices of RM2.01 and RM2.05 [respectively] (five to six times the 2022 price-earnings, close to the historical average). Our local steel bar price assumption for 2022 is RM2,700/ton,” he explained.

TA’s Choo added that he was positive about the outlook for steel this year despite a large backlog of infrastructure projects delayed due to the Covid-19 pandemic.

“Steel demand will likely increase when these projects pick up or start up. Some major economies like the United States and India are also increasing their infrastructure spending to boost their national economies after Covid-19,” Choo said.

Read also:
MIT scientists develop material stronger than steel but light as plastic

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