<B>Enron Eyeing Growth in Paper, Steel Markets</B>

Not content to rest on its laurels, Enron is set to take on the steel and paper markets with the same vigor it has brought to the natural gas sector. Enron Corp.’s Industrial Markets subsidiary is banking its new economy market approach will make it a top tier player, and allow it to grab a major share of both $300 billion a year industries.

Enron Industrial Markets CEO, Jeff McMahon said recently, "We have pretty ambitious goals. On an annualized basis, we'll be one of the top one-two-three merchants of steel in the country, and a similar story for pulp and paper," Though McMahon readily admits his two big projects are "not the sexy industries around Enron," like the much-ballyhooed broadband trading enterprise is, the steel and paper divisions are using Enron's new-economy business model the same way the flashier technology venture does.

"Our notion is that commodity markets generally are going to behave similarly over time," said McMahon, who started in Enron's finance group before moving to Europe to help develop its gas and power operations there. He went on to say that Enron hopes to apply the risk management skills it honed on the natural gas market to both steel and paper. "If you're a newspaper publisher, your revenue stream from subscriptions, paper sales and advertising has zero correlation to newsprint prices, yet your number one cost of production is newsprint prices," McMahon said. "We can fix that for 10 years, or attach it to an index like the (gross domestic product) that tracks ad revenues a little better."

McMahon expects some resistance from the entrenched industries, but is certain that the need for improving the transaction methods will overcome that - quickly. He predicts Enron will move 3 to 5 million tons of product in each of the industries, on an annualized basis, by the end of 2001.

McMahon said Enron will focus on particular product specifications in both steel and paper to ease trading standardization.

The Internet gives Enron the markets on the backbone of EnronOnline, a bilateral trading platform which recorded $330 billion in transactions last year, and last July launched pulp and paper sister site, ClickPaper.

"We get immediate reach globally now and I can assure that when Enron is putting up prices for hot-rolled steel in North America every single day, the entire industry is looking at it." EyeforEnergy Newsdesk