Page 14 - Annual report eng 2020

Tycoons Worldwide Group (Thailand) Plc.

On March 8, 2018, Trump signed steel and aluminum tariffs that imposes 25% duty on
steel and 10% charge on aluminum, which took effect on Mar 23, 2018. TYCN's
export to U.S. is is less than 5% of its sales, therefore the tariff does not bother

TYCN's export. However, the long term influence of US-China trade war cannot be
ignored..

Considering the obstacle of China’s steel product in US market, TYCN viewed it as a
good opportunity. Therefore, TYCN has adjusted its production line and added new
equipment in order to produce US standard screws and to take over China’s market
share in US.

3.1.2 Product and raw material price

TYCN’s major raw materials for downstream products are billets and wire rods.
Therefore, billet and wire rod prices play an important role when it comes to sales,
cost, and profit. TYCN’s raw materials sources are diversified by countries such as
China, Russia, Oman, and Thailand. As the largest steel producing country, China’s
policy on producing and selling steel will directly affect global steel prices. TYCN’s
raw material and product prices fluctuate with global prices, further influencing the
company’s revenue and profit.

The steel industry still has to be closely monitored vis-a-vis global steel price, which
has been steadily rising since the end of 2020, especially due to increasing Chinese
demand despite the Covid-19 situation. Demand from China increased by 8 per cent in
2020, compared to 2019, forcing China to import every type of steel.

Meanwhile, many countries faced economic recession, both in Europe and Japan,
causing many steel furnaces to be shut down, pushing all types of global steel prices,
including construction steel, up by 10 per cent. Global steel prices will continue to rise
until the first quarter of 2021 and should fall in the second quarter as steel companies
that were shut down due to Covid-19 gradually reopen.

3.1.3 Potential competitors

As the AEC, ASEAN Economic Community, has been setup by ASEAN on January
st
1 , 2016, China, the U.S., Japan and other countries has launched new ASEAN
strategies, pledging that they will strengthen business relationship with the AEC, and
the investments in ASEAN has attracted more global attentions. Therefore, the impact
of China’s capacity-offshoring policy on Thailand and ASEAN’s steel industry
deserves watching.

3.2 Financial risks

3.2.1 Exchange rate and interest rate

TYCN’ foreign exchange position may vary by the ratio of import and export. TYCN
can also avoid the foreign exchange risk by signing forward contracts to offset the net
foreign exchange position. TYCN group uses USD loans for working capital and long
term investment. Therefore, the interest rate should be carefully watched. TYCN can

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