Posted on 28 Jun 2012
Malaysian Steel Works (KL) Bhd (Masteel) has sealed a RM500mil offtake agreement with Switzerland-based Trafigura Pte Ltd, the world's second-largest bulk commodity trader for a three-year supply of 270,000 tonnes of steel billets and steel bars.
Masteel managing director Datuk Seri Tai Hean Leng said Masteel would be one of the major steel product suppliers to Trafigura's Asia Pacific clients, with the first batch of supply to commence in the second half of this year.
“With this offtake agreement, Masteel will be able to comfortably utilise its new upstream and downstream production capacities that are coming onstream within the next two years,” Tai said after the signing ceremony between Masteel and Trafigura on the supply agreement witnessed by Deputy International Trade and Industry Minister Datuk Jacob Dungau Sagan yesterday.
Masteel is one of the top five integrated steel companies in Malaysia. Its upstream plant for steel billets in Bukit Raja has a production capacity of 550,000 tonnes and plans are afoot to increase capacity to 600,000 tonnes in the near term.
Tai noted that the group's downstream rolling mill in Petaling Jaya, which had a capacity of 350,000 tonnes steel bars, would also see an additional 200,000 tonnes increase in production via the setting up of a new RM95mil rolling mill.
Masteel’s plant in Klang. The company is also bidding for various goverment-related projects.
“We have already secured the financing for the new rolling mill and expects it to take 18 months to be completed,” he added.
According to Tai, Masteel is also actively bidding to secure steel products supply in the various government-related projects.
“For example, the Klang Valley MRT project is estimated at RM5bil, of which RM2bil to RM3bil will likely consist of steel products.
“If successful, the contract would keep the company busy for the next three to four years,” he added.
Tai also said: “With our yearly revenue growth averaging 27% in the past four years, Masteel is expected to continue with this trend in the next few years based on the prevailing positive business environment for steel within Malaysia and in the region.”
Meanwhile, Trafigura managing director Dominic Watters said Trafigura had set up its regional commodity hub in Singapore last year and expanding into the ferrous market.
“To date, we have invested significantly in Malaysia including in oil terminals and metal warehouses in Pasir Gudang and a metals warehouse in Port Klang,” he added.
According to Watters, Malaysia has been identified as a key country for Trafigura's growth in Asia.
Historically, the bulk of ferrous trade movements have been in developed markets such as the United States and Europe.
He noted: “However, in recent years we witnessed a major shift in our customer base, which is moving eastwards from the European and American markets.
“Therefore, we are responding to the shift by increasing our activities in the Asia-Pacific region,” added Warrets.
Trafigura which has an annual revenue of US$122bil, sources, stores and transport a diverse range of raw materials from oil and refined products to non-ferrous metals, iron ore and coal to clients worldwide.
