Masteel's Managing Director and CEO Tai Hean Leng said the new technology implementation is part of a two and a half year strategic program to increase cost efficiency by utilizing the best plant and process technology to produce quality steel products at the lowest production cost.

The expenditure has been financed by both internally generated funds and borrowings. "This planned increase in capacity augurs well with the present upswing in steel demand locally and the Southeast Asia region. We expect to benefit from the strong steel demand growth in the next 12 to 24 months, fuelled by projects under the 9th Malaysia Plan and the increase of demand from ASEAN countries," he said in a statement on Nov 1.

Masteel's cost efficiency programme was first initiated in 2005. Tai said the completed exercise had successfully reduced the overall cost of production by 10 per cent this year, and is expected to further increase production capacity up to 450,000 metric tonne per annum by 2008.

"With the new technology in place and increased capacity, Masteel will be able to capitalize on the anticipated upsurge for construction steel demand in Malaysia, especially from the implementation of the 5 year 9th Malaysia Plan, which has an expenditure budget of RM200 billion," he said. "Masteel is expected to benefit directly from the RM118 billion earmarked for construction and infrastructure." he added.

Masteel has an annual production capacity of 700,000 tonnes. It makes high tensile steel bars, mild steel bars and prime steel billets. It said the demand from the ASEAN region is expected to continue to grow. The market size for the ASEAN region for Masteel products is more than 5 million metric tonnes per year.

Masteel recorded a strong 118 per cent year-on-year growth in net profit for the first half of 2007. It booked an interim profit before tax of RM21.7 million on a revenue of RM256 million against a net profit of RM10 million on a revenue of RM158 million in the corresponding period last year.

Source: Asia Pulse