Bernama reported that OSK Research Sdn Bhd continues to have high expectations of the rollout of projects under various stimulus packages, bolstering steel millers' bottom lines, especially in the upcoming calendar year.

In a research note, OSK Research Sdn Bhd said that local steel mills may continue to export billets to the South East Asian market as China's imposition of a 25% export tax had created a vacuum in supply. It said an improvement in the economies of the Middle East countries, Australia, Pakistan and Bangladesh would also be a boon to Malaysia's billet exports.

Despite the fact that steel prices and demand are expected to be volatile in the coming year, OSK Research said that the market will be searching for recovery plays, which would put the steel counters in the limelight given that the stimulus packages worldwide will translate into physical steel demand. It added that "Given the fact that local steel prices have continued to stay firm, with steel bars hovering at MYR 2,000 and wire rods at MYR 2,300 per tonne, we are keeping our fingers crossed and maintain our key assumptions."

As most of the steel mills are still reporting losses for the second quarter of calendar year 2009 with the exception of Ann Joo, the research firm is most certain that financial year 2009 will be a washout year although the surge in steel prices in May and June 2009 will be favorable for steel mills in the coming quarter.

OSK Research Sdn Bhd however remains hopeful of a better financial year 2010 as various governments pour in money via their respective stimulus packages.

(Sourced from www.bernama.com)