Posted on 28 Oct 2009
Malaysia Steel Works (KL) Bhd (Masteel) will soon penetrate the New Zealand steel market after clinching an agreement to export RM120mil worth of steel bars to the Australian market via Stemcor Australia Pty Ltd, said managing director and chief executive officer Datuk Seri Tai Hean Leng.
He said the Certification of Product Compliance from the Australian Certification Authority for Reinforcing Steels (ACRS) that was awarded to the company would give it advantage in its bid to penetrate the
ACRS is an independent third-party accreditation body which ensures that reinforcing steels comply with Australian standards.
"The ACRS accreditation is accepted in both countries and we see that these countries will be our potential main export market in the next four to five years' time," Tai said yesterday at the signing ceremony between the company and Stemcor
The deal with Stemcor will see Masteel exporting steel bars worth RM120mil to
Tai said cementing Masteel's presence in the Australian market would further augment its expertise as an exporter of steel billets to Asia Pacific markets.
"This is part of our long-term strategy to focus on export markets for growth and we have worked hard to establish this for the last five years," he said.
At present, Masteel's exports account for 35% to annual production of 450,000 tonnes of billets and 350,000 tonnes steel bars, according to Tai.
"We plan to invest between RM15mil and RM18mil on new technology next year to boost efficiency and quality in order to reduce manufacturing cost," he said. "We are dedicating 60% of our products for local market while the rest will be for export."
On the outlook of the steel industry, Tai said despite the global economic meltdown, Masteel expected demand for steel to recover from the fourth quarter this year as a result of the Government's pump-priming initiatives.
"Given this backdrop and with this new off-take agreement (with Stemcor), Masteel is optimistic these developments will contribute to a healthier financial performance for the next two years," he said.
OSK Research Sdn Bhd analyst Ng Sem Guan said in a report that Masteel's Stemcor deal marked a milestone for the company in its venture into the "huge" export market for steel products.
"Our market sources reveal that as the Australian market normally offers better margins compared with the domestic market, the new contract may add optimism to our profit projection and immediate share price performance," he said.
