Indonesia’s Market for Stainless Steel

THE INDONESIA’S MARKET

FOR STAINLESS STEEL

EXECUTIVE SUMMARY

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,

Prepared by Data Consult 3

 Indonesia’s Market for Stainless Steel

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.

• Manufacturing industry growth in 2009 is forecasted to reach 2.0%, down

significantly from the preceding year. The reason for this flagging performance is
weakening exports in tandem with slowing domestic demand. The global
economic crisis will give significant blow to export oriented manufacturing,
including textiles and textile products, footwear, electronics, automotives, wood
and wood handicrafts.

• 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.

Stainless steel market

• The market size of stainless steel in Indonesia hasfluctuated with increasing

trend from around 76.4 thousand tons in 2001 to 140.7 thousand tons in 2005 ,
declined slightly to 123.9 thousand tons in 2006 , but revived strongly
afterward to to 322 thousand tons in 2008.

• 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.

• The average growth of market size in the last 8 years is 32% a year, while in
the last five years the average growth is almost 50% a 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. These type of products are used mainly by automotive component
industry, electrical component , commercial kitchen products and gasket
manufacturing.

Prepared by Data Consult 4

 Indonesia’s Market for Stainless Steel

• The market is dominated by flat products accounting for around 75% and the
remaining share for bars & wires ( 17.5%), tubular (2.7%) and fitting and
flanges (4.6 %). In terms of value, the composition is 67 % for flat products, 16
% for bars and wires, 5 % for tubulars and 12 % flanges and fittings. There is a
trend of increasing share of bars and wires, while the shares of tubulars and
fittings tend to decrease over the last 8 years.

• The Indonesia’s consumption of stainless steel is still small, only around

320,000 tons or around 5% of the total consumption of carbon steel which is
around 7.5 million tons a year. Per capita stainless steel consumption is
around 1.5 kg as compared to 33 kg for carbon steel.

• 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. There
are two cold rolling mills, but both of them use imported materials for their
productions. There are plans to develop nickel smelter and stainless steel
making plants, but these projects are suspended .

Flat products

• The market size of flat products totals 243 thousand tons with a value of
around US$ 394 million in 2008. However, around 30% million is used by
existing cold rolling millers. Imported hot rolled flat stainless steel amounted to
167.1 thousand tons or 61.4 % , while cold rolled flat stainless steel 105.2
thousand tons or 38.6 % of total import in 2008.

• In the meantime, since 2006, 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.

• 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. Most of SS

Prepared by Data Consult 5

 Indonesia’s Market for Stainless Steel

200 series consist of SS 201 or J 4 grade which are imported mainly by PT

Jindal Stainless Indonesia.
• Including Jindal, about 70% of imports are done by end users, and only 30 %
by traders / stockiest. However, if Jindal is excluded, the composition of
imports is 62% by direct users and 38% by traders.
• Excluding , Jindal , top five importers are PT Kingfurn International ( furniture
industry), PT Sutindo Raya Mulia ( Trader), PT Steel Pipe Industry Indonesia (
Pipe industry), PT Heisei Stainless Steel Industry ( Pipe indusry ) and PT JFE
Shoji Steel ( trading and coil center).
• Top five suppliers are Acerinox, Malaysia , Sunstar Logistic, Singapore , Inox
Stal Handelsselskab, JFE Shoji Trade Corp , and Oitokumpu Stainless OY

• The automotive components and kitchenware industries are two largest

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

Bars and wires

• Total market of stainless steel bars and wires is estimated at 56.4 thousand
tons valued at US$ 92.4 million ( CIF value) in 2008
• The annual growth in 2001 and 2008 is around 45 % with substiantial growth
experienced in 2008
• In terms of value , the structure of the market consists of 69 % SS 304, 12 %
SS 316 and 8 % of special grades
• HS 722 300.00 ( Wire of stainless steel ) is the main types of bars and wires
imported into Indonesia. Import of this product totalled US$ 27 million or 30 %
of total import.
• About 75% of imports are done by end users, and only 25% by traders /
stockiest.

Prepared by Data Consult 6

 Indonesia’s Market for Stainless Steel

• Top five importers are PT Alam Lestari Unggul ( Wire ), PT Sutindo Raya
Mulia ( stockiest), PT Avesta Welding ( welding electrodes), PT Good Rich
Pindad Aeronautical ( airacraft component), and PT MCI Prima Gasket ( Gasket
industry)
• Top five suppliers are Thengzhou Tengda ( China), Menam Stainless Wire (
Thailand), Kuang Tai Metal Industrial ( Taiwan) , Nippon Reinz Co ( Japan) and
Light Metal Sdn Bhd ( Malaysia).
• Wire and welding electrode industry is the largest segment of end users of rod
, bar and wire stainless steel , contributing 43 % to total market , followed by
bolt and nut industry ( 13.5%) and furniture industry (7.1%). PT Alam Lestari
Unggul and PT Avesta Welding are two largest users of stainless steel bars
and wires. PT Alam Lestari Unggul is a wire producer that use stainless steel
bars for their raw materials, while PT Avesta Welding uses stainless steel core
wire for their materials.

• Bolt and nut industry is also a major user of stainless steel wires. One of the
major bolt and nut producer, PT Moon Lion Industries use XM7B stainless
steel wire of of 2.17-5.25 mm diameters. . This company use 200-250 tons
stainless steel wires a year.

Tubular products
• Total market of stainless steel tubular products is estimated at 14.8 thousand
tons in 2008 valued at around US$ 60 million ( CIF value) .

• Import is dominated by welded stainless steel pipe of HS 730640 ( other

tubes, welded 12.5 mm lt, diameter less than 37.5 mm of stainless steel) and
HS 730449 (tubes,pipe&hollow profiles,stainless steel ,smls,of circ cross
sect,nes)

• The main grades of stainless steel imported are SS 304 ( 73 %) , SS 316 (

13%) and SS 400 ( 7%). The main countries of origin are Taiwan, Japan,
Germany, China and Korea.

Prepared by Data Consult 7

 Indonesia’s Market for Stainless Steel

• Around 80 % of stainless steel of tubular products are imported by direct end

users and only around 20% by traders/ stockist. Major importing end users
include PT Siemens Indonesia ( Electrical equipment), PT Indah Kiat, (Pulp and
Paper), PT AT Indonesia ( Automotive component).
• Top five importers are PT Siemens Indonesia ( electreical), Indah Kiat group (
pulp and paper) , PT AT Indonesia ( automotive component), PT Komponen
Futaba ( automotive component) and Sutindo Raya Mulia ( trader)
• Top five suppliers are Thengzhou Tengda ( China), Menam Stainless Wire (
Thailand), Kuang Tai Metal Industrial ( Taiwan) , Nippon Reinz Co ( Japan) and
Light Metal Sdn Bhd ( Malaysia).
• Automotive industry is also the largest user of stainless steel tubular products
accounting for about 27% of the total market. Other major end users are Pulp
and paper industry ( 19%) and electrical equipment industry.

Fittings and Flanges

• Total market of stainless steel fittings and flanges is estimated at US$ 67.0
million ( CIF value) in 2008, a sharp increase as compared to only US$ 29
million in 2007.

• The market is dominated by products of HS No.730721 (stainless steel

flanges) accounting for 92% and the rest by stainless fittings ( HS 730723) .

• Around 90% of products are imported by direct end users and only 10% by
traders/ stockist.

• Major importing end users include marine construction/ equipment fabricators,

power plant projects, mining contractors, oil and gas companies, shipbuilding
company, plant equipment and heavy equipment assemblers.

• Flanges and fittings of stainless steels are used mainly by Electric power
generation/ equipment, steel construction , oil and gas industries. These three
segments contributed a combined market share of 77% . PLN , the state
electricity company is the largest user of flanges and fittings .

Prepared by Data Consult 8

 Indonesia’s Market for Stainless Steel

Market prospects

The weakening global demand due to global economic recessions will effect
demand for various export products of Indonesia including those related with
stainless steel based products such as commercial kitchenwareaand home
appliances. The worsening outlook for the world economy also prompted
business to postpone investment spending and to pursue efficiency improvements,
resulting in slowed investment growth with knock-on effects on public purchasing
power.

One of the advantages of the Indonesian economy is the large population that
represents a potential market supporting economic growth. 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.

Although not as strong as previous years especially in 2008, the market for
stainless steel products will be still quite prospective , as some of their downstream
products such as home appliances, and automotive components have still
encouraging prospects. Although expecting a downturn in the market size as
compared to the exceptionally high market in 2008, the market size in the following
years are expected to be still larger than the situation in 2007.

Recommendations

The study recommends several prospective market segments to be further studied

to explore their buying preferences, their processing facilities , sources of raw
materials , market growth etc. These recommended prospective market segments
are automotive component industry, kitchenware, plant equipment, wire industry,
food processing, pulp and paper, electrical components and steel constructions.

Please email to survey_dataconsult@yahoo.com to obtain the full report.

Enclosed is the list of content of the report

Prepared by Data Consult 9

 Indonesia’s Market for Stainless Steel

E MARKET INTELLIGENT REPORT :

STAINLESS STEEL IN INDONESIA
LIST OF CONTENTS

Page
Executive Summary viii

CHAPTER I – INTRODUCTION 1

CHAPTER II – MARKET BACKGROUND

2.1 Global economic crisis to slow down economic growth 3
2.2. Indonesian economy in 2008 4
2.3 Indonesian economy outlook for 2009 8
2.4. Manufacturing sector the backbone of the economy 9
2.5. Trend of construction sector 12

CHAPTER III – TECHNICAL ASPECTS 15

3.1 Definitions and product characteristics 15
3.2 Properties 17
3.3 Technical standard 20
3.4 Application of stainless steel 24

CHAPTER IV – MARKET SIZE OF STAINLESS STEEL PRODUCTS 27

4.1. The market rose sharply in 2008 27
4.2. Flat products dominating the market 29
4.3. New stainless steel making plant under preparations 31

Prepared by Data Consult 10

 Indonesia’s Market for Stainless Steel

Page

CHAPTER V - FLAT STAINLESS STEEL

5.1. Trade classification 33
5.2. Market overview 34
5.3. Two cold rolling mills in operation 36
5.4. Imports fluctuated with strong upward trend 39
5.4.1. Hot rolled flat stainless steel dominating the market 39
5.4.2. Singaore became the largest exporter to Indoensia 44
5.5. Imports dominated by grade 300 and 200 series of stainless steel 46
5.6. Cold rolling millers the largest importer 48
5.6. Key overseas suppliers 55

CHAPTER VI- STAINLESS STEEL ROD,BAR AND WIRE

6.1. Trade classifications 60
6.2. Market overview 62
6.3. Strong imports since 2005 64
6.4. Market dominated by SS 304 grade 65
6.5. End users importers have significant role 67
6.6. Key overseas suppliers 72

CHAPTER VII STAINLESS STEEL TUBULAR PRODUCTS 77

7.1. Product description and trade classifications 77

7.2. Market overview 80
7.3. Development of imports of tubular products 81
7.4 SS 304 dominating tubular markegt 82
7.5. Paper and automotive component industry the major users 83
7.6. Key overseas suppliers 84

Prepared by Data Consult 11

 Indonesia’s Market for Stainless Steel

Page
80
CHAPTER VIII - STAINLESS STEEL FLANGES AND FITTINGS
8.1 Product desctiptions and trade classification 89
8.2 Market overview 90
8.3. Development of imports 91
8.4. Specification of tubes imported 92
8.5. Endusers are direct importers 97
8.6. Key overseas suppliers 99

CHAPTER IX – MARKET SEGMENTS OF STAINLESS STEEL 101

9.1. Flat products 101
9.2. Rod, bars and wires 102
9.3. Stainless steel tubular products 104
9.4. Stainless steel flanges and fittings 105
9.5. Summary of the market segments 106

CHAPTER X – PROFILE OF MAJOR END USERS OF STAINLESS 112

STEEL
10.1. PT Sunstar Engineering Indonesia 112
10.2. PT Kingfurn International 113
10.3. PT Steel Pipe Industry of Indonesia (SPINDO) 114
10.4. PT Nayati Indonesia 117
10.5. PT Heisei Stainless Steel Industry 119
10.6. PT Metalina Tunggal 122
10.7. PT Alam Lestari Unggul 124

CHAPTER XI – PROFILE OF MAJOR TRADERS OF STAINLESS 127

STEEL
11.1 PT Sutindo Raya Mulia 127

Prepared by Data Consult 12

 Indonesia’s Market for Stainless Steel

Page
11.2 PT Angkasa Perindo Sakti 135
11.3 PT Dihen Bersama 139

CHAPTER XII – CONCLUSIONS AND RECOMMENDATIONS 143

12.1. Concluding summary 143
12.2. Recommendations 147

LIST OF TABLES

No Page
2.1. GDP growth and distribution by expenditures, 2005-2008 5
2.2. GDP and other key economic indicators, 2002-2008 7
2.3. Economic growth outlook by sector 9
2.4. Composition of GDP at current market price by sector, 2004-2008 10
2.5. Construction value completed by ICA by type of construction work, 12
2002-2007
2.6. Share of construction value completed by ICA by type of
consutruction works, 2002-2007
4.1. Development of market size of stainless steel in Indonesia, 2001- 27
2008
4.2. Development of market value of stainless steel in Indonesia, 2001- 28
2008
5.1. Market size, import and export of flat stainless steel, 2001-2008 35
5.2. Producers of stainless steel coil/ plate as recorded by the ministry of 37
Industry
5.3. Specifications of products of domestric stainless steel producers 38
5.4. Stainless steel coil/plate production by company and grade, 2008 86
5.5. Development of Indonesia/s import volume of flat stainless steel, 40
2001-2008
5.6. Development of Indonesia/s import value of flat stainless steel, 42
2001-2008

Prepared by Data Consult 13

 Indonesia’s Market for Stainless Steel

5.7 Imports of flat stainless steel by main countries of origins, 2001- 45

2008
5.8 Structure of flat stainless steel improts, by grade, 2006-2008 46
5.9. Importers of SS 304 flat stainless steel, 2006 49
5.10. Importers of SS400 series of flat stainless steel and their imports, 51
2006
5.11. Selected imorters of SS316 52
5.12. Size ofstainless steel coil and plate imported by selectd end users, 53
traders
5.13. Overseas suppliers of flat stainless steel products, 2006 55
5.14. Counries of origin and ain suppliers, 2006 56
6.1. Import volume development of stainless steel bars and wires, 2001- 64
2008
6.2. Import value development of stainless steel bars and wires, 2001- 65
2008
6.3. Imports of stainless steel bars and wires by grade, 2008 66
6.4. Main importers of stainless steel bars and wire products of SS 304 68
grade, 2006
6.5. Main importers of stailess steel bars and wire products of SS 316 69
grade, 2006
6.6. Main importers of stailess steel bars and wire products of Special 70
grade , 2006
6.7. Imports of stainless steel barfs and wire products of SS 304 grade 71
by trading companies
6.8. Suppliers of stainless steel bars and wires, 2006 73
6.9. Country of origins and main suppliers of stainless steel bars and 74
wires, 2006
7.1. Import development of stainless steel tubuars, 2001-2008 81
7.2. Importers of stainless steel tubulars by grade, 2006 83
7.3. Main suppliers of tubulars and countries of origin, 2006 85
7.4. Main suppliers of stainless steel tubulars and their importers, 2006 86
8.1. Import development of stainless steel tubularf products, 2001-2008 91

Prepared by Data Consult 14

 Indonesia’s Market for Stainless Steel

8.2. Type of products imported by selected end users 92

8.3. Main imporers of stainless steel fittings and flanges 98
8.4. Suppliers of stainless steel fittings and flanges, with export value 99
more than US$ 100,000 in 2006
8.5. Other main sjuppliers of stainless steel fittings and flanges, 2006 100
9.1. Market segment of flat stainless steel, 2007 101
9.2. Market segments of stainless steel bars and wires 103
9.3. Market segments of stainless steel tubulars, 2007 104
9.4. Market segments of stainless steel fittings and flanges, 2007 106
9.5. Type of stainless steel used bhy selected industrial users 107
9.6. Summary of market segments of stainles steel in terms of volume, 108
2007
9.7. Summary of market segments of stainles steel in terms of value 109
2007
9.7. Importers of stainless stel buy market segments 110
10.1. Specification of stainless steel used by PT Kingfurn International 113
10.2 Specification of stainless steel used by SPINDO 115
10.3. Specification of stainless steel used by PT Nayati Indonesia 118
10.4. Specification of stainless steel used by PT Heisei Stainless Steel 120
Industry
10.5. Specification of stainless steel used by PT Metalina Tunggal 123
10.6. Specification of stainless steel used by PT Alam Lestari Unggul 125
11.1. Specification of stainless steel imported by PT Sutindo Raya Mulia 127
11.2. Specification of stainless steel imported by PT Angkasa Perindo 136
Sakti
11.3 Specification of stainless steel imported by PT Dihen Bersama 139

LIST OF GRAPHS/ CHARTS

No Page
4.1. Development of market volume and value of stainless steel, 28

Prepared by Data Consult 15

 Indonesia’s Market for Stainless Steel

Indonesia, 2001-2008
4.2. Market structure by type of products ( in volume), 2008 29
4.3. Development of market volume of stainless steel in Indonesia by 30
type of products, 2001-2008
4.4. Development of market valueof stainless steel in Indonesia by type 30
of products, 2001-2008
4.5. Per capaitaq consumption of stainless steel in Indonesia, 2001- 31
2008
5.1. Market development , import and export of flat stainless steel, 35
2001-2008
5.2. Development of import volume and value of flat steel, 2001-2008 44
5.3. Import of flat stainless steel by grade, 2006-2008 47
6.1. Market size ( import) of stainless steel bars and wires, 2001-2008
6.2. Market structure of stainless steel bars and wires by grade
7.2. Market structure of stainless steel tubular by grade 82
8.1. The market of stainless steel fittings and flanges, 2001-2008 91
9.1. Market segmentation of flat stainless steel 102
9.2. Market segmentation of stainless steel bars and wires 103
9.3. Market segmentation of stainless steel tubulars 105
9.4. Market segmentation of stainless steel fittings and flanges 105
9.5. Summary of marke segments of stainless steel 109

APPENDICES

1. Directory of stainless steel traders 149

2. Directory of stainless steel industrial users 163

Please email to survey_dataconsult@yahoo.com to obtain the full report.

Prepared by Data Consult 16