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29 Jun 2012

Masteel, Trafigura in RM500m offtake deal

Business Times

Commodities trading firm Trafigura has signed a three year offtake agreement worth RM500 million (US$156.47 million) with Malaysia Steel Works for the supply of steel billets and bars.

The agreement, signed earlier this week, is expected to commence in the second half, as Trafigura solidifies its expansion eastwards in a bid to tap into the booming demand for resources in Asia.

"Trafigura has identified Malaysia as a key country for our growth in Asia, and the signing of this agreement with Masteel accurately reflects that commitment," said Trafigura Pte Ltd managing director Dominic Watters.

He added: "In recent years, we have witnessed a major shift in our customer base, one which is moving eastwards. Trafigura is responding to that shift by increasing our activities in the Asia Pacific region."

Trafigura, which says it is the world's third biggest trader of raw materials, has also in the last few years been expanding into ferrous metals, attracted by the development of derivatives contracts like steel and iron ore swaps.

Masteel managing director and chief executive officer Dato Sri Tai Hean Leng said: "We are continually expanding our upstream and downstream steel production capacity. This expansion would allow us to comfortably meet the demands of Trafigura's clients in the Asia-Pacific region."

Formerly based in Switzerland, Trafigura announced last month that Singapore would become its main trading centre. Trafigura Pte Ltd is the group's long established Singaporean entity. -- Reuters
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