MASTEEL CLINCHES DEAL WITH AUSTRALIA'S STEMCOR

KUALA LUMPUR, Oct 27 (Bernama) -- Malaysia Steel Works (KL) Bhd (Masteel)
has clinched a deal to export RM120 million (US$35.2 million) worth of steel
bars to Australia over the next two years under an agreement with Stemcor
Australia Pty Ltd.

Its managing director and chief executive officer, Tai Hean Leng, said the
deal signified the company's commitment to export substantial amount of steel
bars to the Australian market.

"Australia and New Zealand will be our main markets in the next four to five
years," he told reporters after signing the off-take agreement with Stemcor here
Tuesday.

Also present was Deputy Trade Minister of International Trade and Industry
Jacob Dungau Sagan.

Stemcor is an independent international steel trading organisation.

Tai said the agreement would allow Masteel to penetrate growth markets like
Australia and New Zealand and at the same time, bring about export income for
the country.

"Cementing our presence in the Australian market would further augment our
expertise as an exporter of steel billets to the 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.

Adding another feather to its cap, Masteel was awarded the Certification of
Product Compliance from the Australian Certification Authority for Reinforcing
Steels (ACRS) for the steel manufacturer's continued effort to raise the bar and
ensure the safe and consistent quality of its products.

ACRS is an independent third-party accreditation system with the goal to
ensure that reinforcing steels are quality-approved materials which comply with
Australian standards.

Tai said the company could also import the products to New Zealand as it has
accepted the ACRS standard.

"Masteel has already made headway into New Zealand market and its first
export deal is expected to be concluded within the next few weeks," he said.

He said currently, export market made up to 35 per cent of Masteel's
production capacity, which annually produced 450,000 tonnes of billet and
350,000 tonnes steel bar.

"We will continue to invest between RM15 million and RM18 million on new
technology to boost efficiency and quality to reduce manufacturing cost next
year," he said.

Tai said despite global economic meltdown, the company expected demand for
steel to recover from the fourth quarter this year on the government's
pump-priming initiatives to boost steel demand.

"Given this backdrop and with this new off-take agreement, Masteel is
optimistic these developments will contribute to a healthier financial
performance for the next two years," he said.

Meanwhile, OSK Research, in a note, said the deal marked a milestone for
Masteel in venturing into the huge export market.

OSK said Masteel's export contribution only represented less than 10 per
cent of group's revenue and was limited to semi-finished steel, namely billets.

"Our market sources reveal that the Australian market normally offers better
margins compared with the domestic market," it said, adding that assuming an
average selling price of RM2,000 per tonne, this represented a supply of 30,000
tonnes of steel bars annually.

It also expected Masteel to be a potential beneficiary of the stimulus
packages announced globally.

"Since the lag impact of high price bars and wire rods transacted in May and
June 2009 will certainly work in favour of the company's coming third quarter
numbers," it said.
-- BERNAMA