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Better steel demand in Malaysia seen for next year
24 Nov 2010
Growth in Malaysia local steel demand next year will largely be determined by the implementation speed of infrastructure projects.
 
    A Local analyst that “Steel demand is expected to be higher next year, driven by a better construction sector.”
 
    While manufacturers will benefit, the analyst said it remained to be seen if the bottomline of companies would see an immediate impact. The analyst added that “It’s hard to tell if company earnings will grow if current depressed prices are to be used as a gauge.”
 
    Analysts said that while manufacturers will benefit from higher steel demand next year, it remains to be seen if the bottomline of companies will see an immediate impact. He said it was hard to determine how steel prices would trend into the New Year, given a price volatility driven by an oversupply in China, the world’s largest steel producer.
 
    Mr Tan Sri William Cheng said chairman of Lion group at the official launch of Malaysia Steel Association recently that he expected to see marginal growth in local demand next year. However, he was confident that the steel and construction industries would benefit from big projects under the Economic Transformation Program.
 
    OSK Research Sdn Bhd said in a report this month that it remained cautious on the short to medium-term outlook for steel mills until the new Lunar calendar year in February, on sluggish steel prices and demand.
 
    A local bank backed analyst said that “It’s very difficult to see anything beyond six months. A lot will ride on when the big projects under the ETP will take off and the percentage of steel utilization in these projects, namely the mass rapid transit system and the 100-storey building under Warisan Merdeka.”
 
    Malaysian Iron and Steel Industry Federation president Mr Chow Chong Long had previously said that domestic steel usage was forecast to grow 5% to 7.5 million tonnes this year.
 
    The federation said that the apparent steel consumption for Malaysia peaked at 8.8 million tonnes in 2007 before declining 5% in 2008 due to the economic recession. A further decline of 16% was seen in 2009 to 7.1 million tonnes. 
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