November 22, 2008

Indonesian steel imports hit record high in 7 months

According to Indonesian Central Statistics Agency report, imports of iron and steel and related products in the January to July 2008 period reached almost USD 7 billion or 7.5 million tonnes, up by 127% YoY from USD 3.08 billion during the same period of last year.

Mr Ansari Bukhari Indonesia's industry ministry's director general for metal, textile & Miscellaneous industries said that the substantial increase in imports may have been prompted by government infrastructure programs.

He added that "These programs require a huge volume of steel. The soaring imports may have also been made possible by the huge demand from the automotive sector, shipyard and electronic devices businesses."

Mr Ansari forecast that domestic steel demand would increase 10% annually. Indonesian steel manufacturers only have the capacity to produce between 4 million and 4.5 million tonnes annually compared to an estimated demand of 12 million tonnes in 2008.

Mr I Gusti Putu Surywirawan ministry's metal industry director said that Aceh Nias Rehabilitation & Reconstruction Agency is still building houses and infrastructure for victims of the 2004 tsunami in Aceh and North Sumatra's Nias. Meanwhile the on going Suramadu bridge project will connect Surabaya with Madura Island, both in East Java.

However, he said that he was suspicious that Indonesia's major steel producers had been increasing their exports since last month and will continue to do so through October 2008. The companies say they are offsetting weaker steel domestic steel demand during the current fasting month of Ramadan.