AUTO SECTOR TO BE MAJOR HIGH-END STEEL CONSUMER
AUTO SECTOR TO BE MAJOR HIGH-END STEEL CONSUMER
The growing Indonesian automobile sector is slated to become one of the largest industrial users of high-end and high-strength steel , behind basic infrastructure and construction , recent research has found .
Choi Bu-Sik , a POSCO researcher based in Jakarta , predicted car production in Indonesia , the second-largest automobile producers in the ASEAN region after Thailand , would grow by 5.5 percent a year from around 1.1 million units in 2015 to 2.4 million in 2025 .
“ Since multi-purpose vehicles account for more than 61 percent of the car sales in Indonesia , compared to 31 percent in China and 28 percent in South Korea , Indonesian demand for automotive steel will grow much faster than many other countries ,” Choi noted .
He observed that since an increasing number of Japanese car makers in Thailand have or plan to make Indonesia another regional production base , due to the extensive damage caused by the massive floods in Thailand in 2011 , Indonesia is poised to become a major car exporter within the ASEAN free trade zone . Choi said Indonesian car exports increased steadily from 170,000 units in 2013 to 200,000 units in 2014 and 210,000 units in 2015 , dominated by Japanese car makers .
These developments , Choi added , would generate a larger demand for automotive steel , which was estimated at 2.1 million tons in 2014 , increasing to 3.1 million tons in 2015 . Imports from Japan fulfilled 46 percent of this demand , South Korea ( mainly POSCO ) 35 percent and other countries the remaining 20 percent .
Thomas Lembong , chairman of the Investment Coordinating Board ( BKPM ), noted in his address at the global vendor forum of South Korea ’ s largest steel company POSCO that even though the world market was now awash with a huge steel surplus as a result of the market slump caused by the steep decline in China ’ s economic growth , the long-term future of steel remains bright .
Indonesia ’ s US $ 450 billion infrastructure development for the 2014-2019 period certainly requires a lot of steel while domestic production is barely sufficient to meet 50 percent of the total demand , Thomas told the forum , which was attended by more than 1,000 steel vendors and POSCO executives from around the world .
TM Zakir Machmud , head of the Economic and Industrial Research Group at the University of Indonesia , who was also another panelist at the forum , said since steel consumption in Indonesia was among the lowest among ASEAN members , there was a great room for growth .
Zakir added that Indonesia still needed to depend on imports for more than 60 percent of its steel needs , notably for upper and mid-stream products , thereby causing a steel trade deficit of $ 6.8 billion in 2015 . In fact , users of high-strength steel sheets for car production still rely almost entirely on imports .
But the 2015 steel trade deficit represented a significant decline from the $ 8.9 billion deficit in 2014 . The 2015 steel import decline was attributed to the startup in early 2014 of the $ 3.50 billion Krakatau Steel-POSCO ( KP ) joint venture integrated steel plant with a capacity of 3 million tons in Cilegon , Banten .
Kenneth KJ Rhee , the marketing director of POSCO Indonesia Inti , the POSCO holding company for its seven subsidiaries in the country , confirmed that automotive steel and other world premium high-end products would be included in the production stream of the KP plant ’ s expansion project that is now under preparation .
( Source : The Jakarta Post )
8 Trade & Investment Bulletin | Number III / December 2016