JAKARTA. The domestic demand of steel is projected to increase in 2016 and 2017, due to the massive infrastructure and electricity projects.
The Indonesian Iron and Steel Association (IISIA) Hidayat Triseputro predicted that the sales of steel products will increase by 5%-9% in 2017 from the target of steel sales in 2016 that amounted to 12 million ton-12.5 million ton.
According to Ministry of Industry, metal and steel industries grew by 6.5% in 2015, or higher than the average of overall industries growth, which stood at the level of 5.3%. “Most of the demands came from the State Electricity Company (PLN) and state owned enterprises (SOEs) of construction sector, such as Adhi Karya, Wijaya Karya, PT PP and others," Hidayat told KONTAN, Tuesday (29/11).
According to Hidayat, the increase in the sales of steel in 2017 will be equal to the sales of steel in 2016. In 2015, the domestic sales of steel amounted to 11.5 million ton.
Meanwhile, PT Krakatau Steel Tbk (KRAS) sets higher sales target than IISIA. On paper, KRAS targets to book a 20% increase in sales in 2017. There are two reasons on why KRAS sets a double-digits growth.
First, the economic growth projection. Second, some of government projects were delayed to the next year. “For an example, the construction of electriticy tower, Cikampek fly over,” said Marketing Director of Krakatau Steel Dadang Danusiri, Tuesday (29/11).
The importers will also enjoy the increase in sales. The utilizations of upstream and downstream factories have just contributed to 50% and 40%, respectively, of the total steel production capacity, which amounted to 14.9 million ton.
Market is now facing the problems related to the increases in the prices of raw materials. President Director of PT KHI Pipe Industries Purwono Widodo said that the increases in the prices of raw materials were affected by the coal price rise.
As the result, the local steel producers had to adjust the price. KHI Pipe Industries had increased the price of pipe from Rp 7,000-Rp 8,000 per kilogram to Rp 9,000 per kilogram.
(Muhammad Farid/Translator)
