M`SIAN STEEL INDUSTRY EYES MIDDLE EAST STEEL MARKET By Manik Mehta

DUBAI, Oct 15 (Bernama) -- Malaysian steel companies are eyeing the
lucrative market of the Middle East where, the construction sector, a main
consumer of steel, still holds out the promise of good business despite a slight
weakening caused by the global financial meltdown.

A number of Malaysian steel executives had just concluded a two-day
conference called the "Middle East STEEL 2008" which ended here Tuesday.

The conference hosted by MEED -- Middle East Business Intelligence --
attracted most of the key steel players in the region.

"We expect the Middle East region to be a very promising market after the
recent slowdown in the region due to a number of factors, including the recent
Ramadan, when business activities limp at a much slower pace," said Tai Hean
Leng, managing director and CEO of Malaysia Steel Works KL Bhd (Masteel) of
Petaling Jaya, in an interview with Bernama.

Dubai is seen by many Malaysian steel suppliers as one gigantic
construction
site, boasting the highest per capita density of construction cranes.

This concentrated presence of construction cranes on a relatively small
piece of real estate is unique and not seen in such concentration elsewhere in
the world.

But, Tai said Iran and Saudi Arabia are also interesting markets for
Malaysia's steel industry.

"Iran is an interesting market despite the difficulties one encounters.
Letters of credit opened by Iranians are not always accepted by many banks.

Secondly, Iran has problems with some countries which have imposed
sanctions
against it," he said.

The Malaysian steel industry has "not been so profoundly affected" by the
global financial turmoil. Tai envisaged a "sharp rebound" and restoration of
investor confidence soon.

Tai was bullish about Malaysia's steel industry because of what he
attributed to the Malaysian government's "fiscal prudence" reflected in the
allocation of RM210 billion for infrastructure projects under the five-year
Ninth Malaysia Plan which will run until 2010.

"Only 30 percent of the allocations have been spent and the rest needs to
be
spent within the next two years.

"We hope the new government (after current Prime Minister Datuk Seri
Abdullah Badawi retires next year) will expeditiously push the projects in the
next 18 months or so. Railways, hospitals, highways and bridges are included for
development in the five-year plan," he said.

Malaysia, with only about nine million tonnes steel production capacity
currently, could increase its capacity if demand in the Middle East rises.

Masteel, with a half-a-million tonne capacity, exports 50 percent of its
production mix to a number of countries.

"Because of the slump in demand in several developed countries, which are
in a state of near recession, demand will come mainly from the Middle East," Tai
said.

But he was also bullish about Malaysia which seemed to have benefited from
the government's "prudent and farsighted policies".

"Malaysia's demand will hold well because of the short time left for the
government to exhaust its allocation. Indeed, Malaysia's banks and consumption
have been insulated against the current global turmoil.

"Our banks are lending because of the cautious and prudent banking
regulations devised by the government which has not caused the haemorrhage
(bleeding) seen elsewhere," he maintained.

Tai also pointed out that steel companies in Malaysia have been fairly
successful and amassed reserves which would help insulate them now.

"They can easily shut down their operations for some time until the
situation improves and live on their past earnings, instead of producing and
building up unnecessary stocks, they can always increase production once demand
rises," he added.
-- BERNAMA