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INDONESIA’S STAINLESS STEEL MARKET

Market background
• The global economic crisis has changed the shape of the world economy. The crisis that began in the United States in 2007 spread worldwide, with no exception to developing countries including Indonesia. However, until the third quarter of 2008 the Indonesian economy was still charting above 6% growth with continued healthy performance in the financial sector reflected in a stable exchange rate. However, toward the end of 2008, the fallout from the crisis began to take hold. Weakening exports, pressure on the balance of payments and turmoil on the money market took their toll on Indonesia’s economic growth. • During 2008, Indonesian’s economy maintained adequate performance amid the global turmoil. Overall economic growth reached 6.1% in 2008, slightly below the 6.3% recorded in the previous year. This growth was primarily driven by private consumption and exports. • On the demand side, the effect of weakening global demand in the first half of 2008 was still offset by high world commodity prices. As a result, exports and investments maintained growth. In the second half of 2008, however, Indonesian exports were hit by the downturn in global economic growth and heightened uncertainty on financial markets, and slowed significantly during the final quarter of the year. • Bank Indonesia projects a drop in economic growth in 2009 to around 4.0% with downside risk if the global economic downturn is greater than predicted. The more modest growth in Indonesia cannot be regarded as bad when compared to the many other countries forecasted to record negative growth. • One of the advantages of the Indonesian economy is the large population that represents a potential market supporting economic growth. During 2009, economic growth in Indonesia will be driven primarily by domestic demand and especially household consumption. Despite predictions of slowing, household consumption is still expected to show resilience, particularly in view of the government plans for an added fiscal stimulus in 2009.

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5%). The reason for this flagging performance is weakening exports in tandem with slowing domestic demand. • • • • 2 .7%) and fitting and flanges (4. In terms of value. The market is dominated by flat products accounting for around 75% and the remaining share for bars & wires ( 17. Stainless steel market • The market size of stainless steel in Indonesia has fluctuated with increasing trend from around 76. The global economic crisis will give significant blow to export oriented manufacturing. 5 % for tubulars and 12 % flanges and fittings. These type of products are used mainly by automotive component industry. electronics. but revived strongly afterward to to 322 thousand tons in 2008. footwear. commercial kitchen products and gasket manufacturing. down significantly from the preceding year. The spectacular market growth of over 100% in 2008 was driven by the rising demand for flat products particularly of cold rolled products of less than 600 mm wide.7 thousand tons in 2005 . 16 % for bars and wires. The market value has also increased from only US$ 117 million in 2001 to around US$ 200 million in 2005 and rocketed to around US$ 563 million in 2008. while the shares of tubulars and fittings tend to decrease over the last 8 years. while in the last five years the average growth is almost 50% a year. electrical component .9 thousand tons in 2006 . • Weak domestic and external demand will force companies in the manufacturing sector to suspend production in a move to avoid excessive build-up of stocks. declined slightly to 123. wood and wood handicrafts. There is a trend of increasing share of bars and wires. tubular (2.• Manufacturing industry growth in 2009 is forecasted to reach 2. The average growth of market size in the last 8 years is 32% a year. including textiles and textile products.6 %).4 thousand tons in 2001 to 140. automotives.0%. the composition is 67 % for flat products.

PT Sutindo Raya Mulia ( Trader). The market is still fully dependent on import for stainless steel materials as there has not any stainless steel making company yet in the country.1 thousand tons or 61.6 % of total import in 2008. about 70% of imports are done by end users. if Jindal is excluded. and only 30 % by traders / stockiest. However. Top five suppliers are Acerinox. and Oitokumpu Stainless OY • • • • • 3 . Sunstar Logistic. • • The market size of flat products totals 243 thousand tons with a value of around US$ 394 million in 2008. Most of SS 200 series consist of SS 201 or J 4 grade which are imported mainly by PT Jindal Stainless Indonesia. Jindal . Singapore . there has been a notable volume of export of cold rolled flat stainless steel due to the operations of cold milling mill of PT Jindal Stainless Steel which is export oriented. Including Jindal. PT Steel Pipe Industry Indonesia ( Pipe industry). Inox Stal Handelsselskab. There are plans to develop nickel smelter and stainless steel making plants. In the meantime. A study made to import documents in 2006 revealed that 40% of flat stainless steel imported consist of SS 200 series and 38% of 300 series. the composition of imports is 62% by direct users and 38% by traders.5 million tons a year. Malaysia . top five importers are PT Kingfurn International ( furniture industry). since 2006.2 thousand tons or 38. but these projects are suspended . However. Excluding .5 kg as compared to 33 kg for carbon steel. Imported hot rolled flat stainless steel amounted to 167.• The Indonesia’s consumption of stainless steel is still small.4 % . but both of them use imported materials for their productions. There are two cold rolling mills.000 tons or around 5% of the total consumption of carbon steel which is around 7. around 30% million is used by existing cold rolling millers. PT Heisei Stainless Steel Industry ( Pipe indusry ) and PT JFE Shoji Steel ( trading and coil center). Per capita stainless steel consumption is around 1. while cold rolled flat stainless steel 105. JFE Shoji Trade Corp . only around 320.

Other major users are plant equipment fabricators. steel constructions and agriculture equipment manufacturers.• The automotive components and kitchenware industries are two largest segments of end users of flat stainless steel. furniture manufacturers. Stainless pipe industry is the third largest user of flat stainless steel particularly of hot rolled products. contributing 26 % and 22% respectively to total market. 4 .