The construction industry would benefit under the Ninth Malaysia Plan (9MP) as the Government has brought forward the budget for RM2.4bil worth of construction projects from the second half of this year, Malaysia Steel Works Bhd (Masteel) chief executive officer Tai Hean Leng said.

“The local steel industry would indirectly benefit from this move as steel represents some of the raw materials required for development,” he said, adding that 15% of the RM2.4bil budget was expected to be paid to contractors as advance payment this month.

Moreover, under the 9MP, RM30bil has been allocated for the next five years, representing RM6bil worth of construction projects annually.

Tai said typically, steel products would constitute about 20% of any construction project.

The public and private sectors each contribute about RM1.2bil to the local steel industry. In total, he said local steel industry worth about RM2.4bil annually.

“Masteel expects to maintain its local market share of 10% to 12% per year, or RM240mil in sales annually. About RM100mil would come from exports,” he added.

According to the Malaysian Iron and Steel Federation (MISF), steel consumption in the country last year registered 16% growth to reach 7.7 million tonnes against 6.6 million tonnes a year earlier.

Both long and flat steel products consumption in Malaysia grew by 15% and 18% respectively last year.

MISF expects the total steel consumption to grow moderately at 8% next year and 12% in 2007 before accelerating to about 15% in 2008 and 2009. However, it expects growth to slow down to 10% by 2010.

Tai said there was speculation that the global steel market was on a downtrend.

“From Masteel's research and analysis, this is not the case. In fact, demand for steel has been consistent for the past several years and is expected to remain buoyant for many years to come,” he said.

He said to prevent oversupply, mills in China were consolidating and the Chinese government had stopped all new and existing integrated steel mills from expanding their capacity.

Tai said the Chinese government was encouraging its steel mill operators to produce higher value-added products.

China is the world’s biggest producer of crude steel, with output in the first five months of this year stood at 136.2 million tonnes.

Tai said the Chinese steel makers were not likely to pose a threat to Malaysian steel industry as they were still subjected to 15% import duty to enter Asean.