Nippon Steel trader inks MOU with Malaysian fabricator

"In the future, through close collaboration with Leform, we will expand our local production for local consumption business in Malaysia, and further capture the demand for steel, mainly infrastructure-related, in the building materials product market in the region, so that we can expand not only in Malaysia but also in ASEAN," NSTC said in a statement.

Commented Law Kok Thye, Leform managing director, "this collaboration (with NSTC) represents a meaningful step forward for Leform, strengthening our strategic position and enhancing our ability to capture new growth opportunities." News of the agreement was announced following Law's visit to Japan last week.

Under the agreement, Leform agreed to "maximize the procurement of base materials from NSTC and NS Trading Malaysia...and consult with NST Malaysia about the procurement of steel materials necessary for the construction of a new facility."

In early March this year as part of a third-party allotment of shares and following a request from Leform, NSTC had invested MYR 25 million ($6.3 million) in the fabricator through NS Trading Malaysia, gaining a stake of about 9%. Leform intends to launch an integrated warehouse and logistics complex in Serendah, Selangor to improve inventory management, speed deliveries and support larger order volumes, with funds from the placement helping to purchase materials and support that expansion.

Leform's Serendah plant reportedly hosts several ERW pipe forming machines, three guardrail machines, three slitting machines and four shearing machines that supposedly give it a capacity for pipes and guardrails of 120,000 tonnes/year and that for flat steel processing of 160,000 t/y, though actual output is apparently well under this.

What NTSC's strategy is regarding Leform remains unclear, but the Tokyo-headquartered company's investment of MYR 25 million – about Yen 1 billion at present exchange rates – is not small, nor is the near 10% shareholding that resulted.

At the very least, NSTC's parent, Nippon Steel, will be able to lock-in a regular quantity of flat rolled sheet exports to Leform (including coated sheet, hot rolled coils and galvanized), either from its works in Japan or from its subsidiaries just north of the border in Thailand – namely NS-Siam United Steel and G Steel Public. Significantly, the latter, located in Rayong on Thailand's eastern seaboard, is a maker of hot rolled coils mainly for use in construction and in ERW steel pipes, as Mysteel Global has reported.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com