Steel Pipe Industry (ISSP) Eyes Demand Opportunities from Automotive Sector

March 06, 2024, 03.20 AM | Reporter: Vina Elvira

ILUSTRASI. Workers check 8 inch electric resistant welding (ERW) steel pipes at the PT production unit. KHI Pipe Industries, a subsidiary of PT. Krakatau Steel Tbk, in Cilegon, Banten, Wednesday (29/5). PT. KHI is increasing its production capacity by 150 million tons to make electric resistant welding (ERW) steel pipes with a diameter of 10 inches to 20 inches in order to capture growing market opportunities related to the development of gas and oil pipeline networks in Asia, including plans to build MRT and monorails in a number of cities. large which will require a supporting pipe network. BETWEEN PHOTOS/Asep Fathulrahman/ss/Spt/13

CORPORATE STRATEGIC - JAKARTA. PT Steel Pipe Industry of Indonesia Tbk (ISSP) sees potential growth in steel pipe demand in line with the massive construction of new car factories in Indonesia, especially Chinese Brand Holder Agents (APM).

The Corporate Secretary of Steel Pipe Industry of Indonesia, Johannes W. Edward, revealed that, broadly speaking, the automotive sector contributes about 18%-20% of total sales. Therefore, ISSP is optimistic that the growth of the domestic automotive market can also drive the company's business growth in the future.

"For 2023 alone, there is an increase in average sales volume per month (in the automotive sector)," Johannes told Kontan.co.id, Tuesday (5/3).

Although there is a large demand opportunity in the automotive sector, ISSP remains vigilant about the implementation of TKDN regulations that must be properly enforced. Because, if not implemented well, Indonesia will only become a market and cannot play a significant role.

Overall, ISSP is targeting a sales volume increase of 10%-20% this year. Johannes said ISSP itself has no plans to increase production capacity because the existing capacity is still sufficient for the needs of the sales volume increase.

In addition to the automotive sector, another positive catalyst for ISSP's performance this year is the continuation of the construction of the Nusantara Capital City (IKN) and infrastructure development.

"Certainly, a smooth presidential election will be our initial capital in entering 2024. It is hoped that the incoming government can take pro-domestic entrepreneur policies, especially for strategic industries, to withstand the onslaught of imports," he added.

In the 9 months of 2023, ISSP recorded a net profit of IDR 363.7 billion, or grew by 24.2% from the same period in 2022 which was IDR 293 billion.

In terms of sales, throughout the 9 months of 2023, ISSP still managed to record a sales volume increase of 4.7% amid the pressure of falling steel prices, resulting in a sales value of IDR 4.8 trillion, or an increase of 0.5% YoY.