LOCAL steelmaker Southern Steel Bhd is cautiously optimistic of a rebound in steel prices come early next year.

"There is no reason for a collapse in steel prices on a longer- term basis because they are determined mainly by oil prices and partly by scrap prices," group financial controller Koay Chong Beng told reporters before the company's extraodinary general meeting in Penang yesterday.

Nevertheless, he hopes the current financial turmoil in the US will be quickly settled to avert any impact on the real economy.

Koay said that Southern Steel's long-term strategy has always been to balance out its construction and industrial-grade steel businesses.

"In the event of a slowdown in the construction sector, we will be hurt less," he said.

Southern Steel's export markets include North America, the Middle East, Australia and Asean countries.

On the domestic sector, Koay said that demand for steel had dropped in the past few months.

"This was due to the political uncertainties, which we hope will be settled soon," he said.

Koay also said that Southern Steel currently has the least amount committed in investments.

"We believe in going into major investments during a slowdown and we continue to look for opportunities," he said, adding that the company's term borrowings are less than RM100 million.

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