Posted on 27 Apr 2015
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State-run steel giant PT Krakatau
Steel has demanded that the government immediately impose higher fees on
imported steel entering the country to save the domestic steel industry from
falling.
“We urge the government to soon raise import duties to around 20 percent for
foreign-made steel to help local steelmakers offset a steel-price slump and
unfair competition from foreign sellers,” Krakatau Steel independent
commissioner Roy E. Maningkas said in a limited press briefing on Friday.
The government currently imposes a 0 to 5 percent tariff on imported steel, far
lower than tariffs in Malaysia and Thailand, which stand at 20 percent and
around 40 percent, respectively, he said.
In addition, a number of foreign steelmakers had alloyed their steel with a
variety of elements and set the price below fair market value, Roy said.
To compete with foreign steelmakers, Krakatau Steel has adjusted its steel
price with a low market price of between US$380 and $390 per ton, a wide gap
from its production costs that hit around $600 per ton, he said.
Domestic steel production hits only around 4 million tons per annum, below the
country’s total demand for steel that stood at around 13 million tons last
year, according to data from Southeast Asia Iron and Steel Institute (SEAISI)
and Krakatau Steel.
While local steel supply does not fulfill demand yet, Chinese steels have been
so far dominated Indonesia’s steel market.
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The
China National Bureau of Statistics has revealed that China produced 69.5
million tons of steel in March, with the country accounting for almost half of
global steel consumption.
In contrast, Krakatau Steel — which controls 45 percent of the country’s steel
output — has registered ballooning losses over three consecutive years.
The company — whose shares are traded on the bourse under the code KRAS —
booked $149.8 million in net losses last year, a surge from $20.43 million in
2012.
Indonesian Iron and Steel Industry Association (IISIA) chairman Hidayat
Triseputro said that most domestic steelmakers hoped the government would soon
carry out infrastructure projects this year to help raise demand for domestic
steel.
“However, if the potential market for domestic steels is supplied with imported
steels [through unfair competition], the government needs to protect the local
industry,” he told The Jakarta Post.
Hidayat added that the government needed to provide a tool to curb steel
smuggling, which occurred through certain areas, such as Batam.
Mahmud Syaltout, international trade law and policy expert with the University
of Indonesia (UI), said that the government could further impose an antidumping
duty if it was proven that foreign steelmakers lowered their steel prices below
their own cost of goods sold.
“If steel is still considered a strategic industry, the state may order the
National Intelligence Agency [BIN] to partner with universities or research
institutions to investigate products and the prices of imported steels,” he
told the Post.
Roy said he was upbeat that his firm would register a better financial
performance this year if the government started imposing higher import duties
for steel.
The Industry Ministry has previously stated that the government planned to
raise import duties for steel to around 15 percent as of the second semester of
this year.
