Malaysian steel companies are eyeing the lucrative market of the Middle East

Malaysian steel industry eyes Middle East steel market. by Manik Mehta
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 yesterday. 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".