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ZINC COATED STEEL SHEET INDUSTRY REINVIGORATED.

Introduction

When the economic crisis destroyed the construction sector, the zinc industry was badly affected since the sector was the main consumer of zinc sheets. It is understandable that a number of zinc producers had to close down their factories or maintain their operation at a much lower production capacity.

A number of companies with strong capital and well established marketing network overseas manage to export their products. Some of them were successful in this venture but many were not able to face the tough competition at the international market, forcing them to rely on the limited market share in the country.

In the beginning of this year, however, the industry started to see the light at the end of the tunnel especially when the government started to reprogram the development of low cost housing even if the number is much smaller compared to the period prior to the crisis.

The domestic market condition, however, is still sluggish while competition is getting more fierce, not just from similar products but also substitute products such as asbestos sheets and brick tiles.

This report will discuss the development of zinc industry in Indonesia during the crisis,, the competition and market opportunities that can be expected in the future.

Description of products

Zinc coated steel sheet is a derivative product of Cold Rolled Sheet (CRS) which is coated with zinc. Zinc coated steel sheet produced in Indonesia is classified into two major groups ie plain zinc coated steel sheet and colored zinc coated steel sheet. The latter is produced from the former that has been coated with color material. In terms of shapes, zinc coated steel sheets consists of the flat one and the corrugated one.

Zinc coated steel sheet produced in Indonesia has a thickness of 0.20 mm to more than 1.00 mm. The past 12 months however, have seen more zinc coated steel sheet produced with thickness of less than 0.20 mm which is actually below the minimum thickness under the Standard Nasional Indonesia (SNI).

Decreasing number of producers

The declining demand for zinc in the country as a consequence of termination of many construction projects has forced many local zinc producers to quit. Among the companies that have had to close down their operation are PT Polyguna Nusantara, PT Super Steel Indah, PT Eastindo Utama Industri, PT Alim Ampuh Jaya, PT jaindo Utama and PT Union.

In the efforts to improve the efficiency, several producers that belong to one particular group have merged into one zinc producer. One example was, PT Industri Baja Garuda in Medan, that has merged with PT Industri Baja Galvanilmas which is owned by the same person ie Bobby Pitoy.

According to the Association of Zinc Coated Steel Sheets (GAPBESI) there are 15 factories that are operational with a total capacity of 1.187.000 ton per year. However, field checking has shown that 5 out of these 15 companies have not been operational for the past one or two years. Meanwhile the ones that are still operational are struggling to do so at a much lower rate (less than 50%) than their production capacity.

These companies that are still surviving are those that have started to be export oriented and they are normally the major zinc producers in Indonesia such as PT Fumira, PT BHP Steel Indonesia and PT-Tumbak Mas.

Table - 1 List of Zinc Coated Steel Sheets Producers in Indonesia, 2000
 Producer Established Location
 /expanded

PT Fumira 19,681,997 West Java,
 Semarang
PT Tumbak Mas 1967, 1981, 1996 West Java
PT Bisma Narendra 1998 West Java
PT BHP Steel Indonesia 1995 Cilegon
PT Sarana Sentral Baja 1999 West Java
PT Industri Galvanael Mas 1996 Medan
PT Intan Nasional Indonesia 1971, 1982 Medan
PT Kerismas Witico Makmur 1972, 1979 Jakarta,
 Manado
PT Wira Mustika 1977 Jakarta
PT Kalimantan Steel Corp 1972, 1981 Pontianak,
 Surabaya
PT Industri Baja Garuda 1970 Medan
PT Sermani Steel 1970 U.Pandang
PT Polyguna Nusantara 1972 Padang
PT Dharmaputera 1974 Palembang
PT Semarang Makmur 1975 Semarang
Total

 Producer Prod. Cap
 (ton/year)

PT Fumira 210.000

PT Tumbak Mas 155.000
PT Bisma Narendra 58.000
PT BHP Steel Indonesia 130.000
PT Sarana Sentral Baja 100.000
PT Industri Galvanael Mas 100.000
PT Intan Nasional Indonesia 90.000
PT Kerismas Witico Makmur 100.000

PT Wira Mustika 48.000
PT Kalimantan Steel Corp 43.000

PT Industri Baja Garuda 0
PT Sermani Steel 36,000
PT Polyguna Nusantara 24,000
PT Dharmaputera 15,000
PT Semarang Makmur 42,000
Total 1,187,000



Source: Association Steel Sheet/Data Consult

Production of Zinc Coated Steel Sheet dropped considerably

The past two years, 1998 and 1999, have seen a drastic drop of production of zinc coated steel sheet in the country. The industry reached the lowest point in 1998, when the production only reached 230,645 tons compared to 413,738 tons in 1997. This unfavourable situation is understandable since at the same time the construction sector experienced a contraction of up to 46% as seen from its contribution to the GDP (Gross Domestic Product).

In 1999, the signs of revival started to appear, albeit softly in the form of an increase of 8,55%. According to a source within the zinc industry, the year 2000 has shown better signs of recovery During the semester I of this year, zinc production has reached 147.800 ton.

Table - 2 Production of zinc coated steel sheet, 1995-2000(*)
Year Production Growth
 (000 tons) (%)

1995 406,141 --
1996 414,790 2.13
1997 413,738 -0.25
1998 230,645 -44.25
1999 250,359 8.55
2000(*) 147,800 --



Note: (*) as of June 2000

The Industry dominated by 5 companies

Although the Department of Trade and Industry registered 22 companies and the association 15 companies in operation, the Indonesian zinc coated steel sheet industry is actually dominated by 5 major companies ie PT Fumira, PT Tumbak Mas, PT BHP Steel, PT Kerismas Witico Makmur, PT Bisma Narendra and PT Kalisco.

In terms of groups that oversee these companies, the industry is dominated by 3 major groups ie Argo Manunggal Group, Salim Group and Rodamas Group and an Australian based company, BHP steel.

PT Fumira, is a producer of zinc coated steel sheet with a production capacity of 210.000 ton per year in 1999. PT Fumira is a joint venture between a local company PT Ragam Logam which is under the Argo Manunggal Group (40%) and 2 Japanese companies ie Nippon Steel Corp and Mitsui & Co.

In view of the production capacity, the second largest producer is PT Tumbakmas Inti Mulia, a subsidiary of the Roda Mas Group. PT BHP Steel Indonesia is a joint venture between an Australian company, The Broken Hill Proprietary Company Ltd and several local companies ie PT Puma Sentana Baja, PT Krakatau Industrial Estate, Cilegon Cahaya Steel and Yayasan Kesejahteraan Karyawan Bank Indonesia. This company has a production capacity of 130.000 ton and is the third largest producer in Indonesia.

The following table shows that even the large producers of zinc coated steel sheets have been operating at 15-40% of their production capacity. Only PT Kerismas Witico makmur has been producing at above 50% of the production capacity.

Table - 3 Production of zinc coated steel sheet by company, 1997-1999

(tons)
 Producers Prod. Cap 1997

PT Fumira 210,000 55,156
PT Tumbak Mas 155,000 57,962
PT Bisma Narendra 58,000 0
PT BHP Steel Indonesia 130,000 102,144
PT Sarana Sentral Baja 100,000 0
PT Industri Galvanael Mas 100,000 0
PT Intan Nasional Indonesia 90,000 22,259
PT Kerismas Witico Makmur 100,000 79,774
PT Wira Mustika 48,000 8,827
PT Kalimantan Steel Corp 43,000 29,239
PT Industri Baja Garuda 0 25,325
PT Sermani Steel 36 22,237
PT Polyguna Nusantara 24,000 0
PT Dharmaputera 15,000 10,816
Others n.a. 0
Total 413,738

 Producers 1998 1999

PT Fumira 85,348 52,707
PT Tumbak Mas 14,040 24,147
PT Bisma Narendra 1,060 13,586
PT BHP Steel Indonesia 29,898 57,695
PT Sarana Sentral Baja 651 86
PT Industri Galvanael Mas 14,621 0
PT Intan Nasional Indonesia -- 0
PT Kerismas Witico Makmur 47,663 67,359
PT Wira Mustika -- 0
PT Kalimantan Steel Corp 15,841 19,113
PT Industri Baja Garuda 0 0
PT Sermani Steel 20,000 7,090
PT Polyguna Nusantara 0 0
PT Dharmaputera 1,512 6,390
Others 0 1,771
Total 230,645 250



Source: GI sheet association/field research/PT KS

Import of zinc coated steel sheet still huge

Although the local market is still sluggish, it appears that the import of zinc coated steel sheet has remained large as it reached 55.465 tons worth 1 US$ 34.925.000. The import has dropped compared to the figure of the previous three years which reached an average of 77.000 - 91.000 ton per year.

The import of zinc coated steel sheet has been dominated by the colored type that is required for roofs. The import has been done by BRC Lysaght Indonesia, one of the most prominent roof supplier. The import of the type known as "electrolytically plated with zinc" is also quite large particularly to meet the demand from the automotive, sector One of the importers is PT Toyota Astra motor which imports zinc coated steel sheet directly particularly the "zinc/aluminium coated GI sheet" type.

Import of zinc coated steel sheet is also done by producers of electronic and electrical goods such as AC ie PT Matushishta Gobel Electronics, PT Sanyo Industries and PT Hartono Electronics.

The following table shows that import of zinc coated steel sheet declined in 1999. In 2000, the import will increase as shown by the volume registered during the first semester which reached 29.924 ton. This growth has been triggered by the recovery of the automotive industry and the business sector in general which has created demands due to construction of new buildings and renovation of existing ones.

Table - 4 Development of Import of zinc coated steel sheet by type, 1995 - June 2000

TONS '000 US$
 No. HS DESCRIPTION 1995

7210.30.000 Electrolytically plated with zinc 22,572
 17,819
7210.41.000 Corrugated 114
 115
7210.49.000 Other 19,242
 14,275
7210.50.000 Plated or coated with chrominum oxides or 20,262
 with chromium and chromium oxides 14,661
7210.61.000 Plated or coated with aluminium zinc 10,805
 alloys 8,832
7210.69.000 Other of flat roll prod. Of iron which --
 plated/coated with aluminium-zinc alloys --
7210.70.000 Painted varnised or coaled with plastic 4,313
 5,969

 TOTAL 77,308
 61,671

 DESCRIPTION 1996 1997

Electrolytically plated with zinc 23,212 17,293
 18,265 12,401
Corrugated 1 561
 5 663
Other 26,540 27,066
 19,638 17,754
Plated or coated with chrominum oxides or 12,946 14,103
with chromium and chromium oxides 11,002 10,267
Plated or coated with aluminium zinc 9,687 10,883
alloys 7,035 7,222
Other of flat roll prod. Of iron which 3,302 5,638
plated/coated with aluminium-zinc alloys 2,671 5,252
Painted varnised or coaled with plastic 2,646 3,658
 3,616 4,778

 TOTAL 78,334 79,202
 62,232 58,337

 DESCRIPTION 1998 1999

Electrolytically plated with zinc 21,988 15,137
 15,544 10,392
Corrugated 686 1
 758 7
Other 35,981 18,431
 23,193 10,914
Plated or coated with chrominum oxides or 20,362 17,246
with chromium and chromium oxides 14,640 10,247
Plated or coated with aluminium zinc 7,217 1,834
alloys 5,168 1,027
Other of flat roll prod. Of iron which 2,659 123
plated/coated with aluminium-zinc alloys 2,145 84
Painted varnised or coaled with plastic 2,622 2,693
 3,020 2,254

 TOTAL 91,515 55,465
 64,468 34,925

 DESCRIPTION 2000(*)

Electrolytically plated with zinc 11,252
 6,501
Corrugated 4
 4
Other 4,587
 2,636
Plated or coated with chrominum oxides or 8,893
with chromium and chromium oxides 5,273
Plated or coated with aluminium zinc 3,070
alloys 1,799
Other of flat roll prod. Of iron which 643
plated/coated with aluminium-zinc alloys 462
Painted varnised or coaled with plastic 1,475
 1,182

 TOTAL 29,924
 17,857



Source: Data Consult

Japan is the main supplier of zinc coated steel sheet to Indonesia. The supply from Japan, prior to the crisis, reached 45-50% of Indonesia's total import of this product. During the past two years, the supply has increased sharply, into 75-80% of Indonesia's total import. The second largest supplier, with a much lower portion, is Korea. In 1998, Korea supplied 12.761 tons of zinc coated steel sheet to Indonesia or 14% of the total import by Indonesia.

Table - 5 Development of Import of zinc coated steel sheet by country of origin, 1995 - 1999

Tons '000 US$
 Country of origin 1995 1996 1997 1998 1999

Japan 40,016 39,670 39,719 65,971 40,992
 39,903 34,698 30,445 45,650 26,882

USA 652 583 37 368 388
 506 475 115 520 283

Germany 79 832 166 107 98
 93 600 160 86 63

France 135 695 301 87 11
 156 575 243 218 9

Korea 15,539 17,887 16,911 12,761 8,823
 11,713 13,624 11,459 9,146 5,460

Australia 4,686 2,808 4,287 1,686 84
 3,536 1,954 3,203 1,255 60

Taiwan 312 7,585 7,639 935 1,633
 377 4,933 4,893 662 890

Singapore 243 273 620 515 418
 201 109 391 437 115

Canada 99 48 462 686 --
 67 91 564 783 --

Belgium & Luxemburg 1,605 3,411 34,381 1,653 838
 1,066 2,292 2,102 1,057 160

Brazil 691 496 3,656 3,313 605
 433 383 2,524 2,191 308

Others 13,251 4,046 1,966 3,433 1,575
 3,620 2,498 2,238 2,463 695
 Total 77,308 78,334 79,202 91,515 55,465
 616,711 62,232 58,337 64,468 34,925



Source: Data Consult

Export of zinc coated steel sheet increased

The sharp depreciation of rupiah against the US $ has encouraged producers of zinc coated steel sheets to penetrate the export market. This is also due to the sluggish domestic market which has been affected by the weakening purchasing power of the people.

Increasing the export of this product is not so easy as it has to face fierce competition with the products of neighbouring countries such as Malaysia. The companies that have managed to push into the export market are those with connections overseas such as PT Fumira which has connection with a giant Japanese steel company and PT BHP Steel Indonesia which has a foreign partner from Australia.

The type of product that has been exported by the Indonesian producers is the steel sheet coated with aluminium zinc.

Table - 6 Development of Export of Zinc Coated Steel Sheet 1995-2000(*)

Tons '000 US$
No. HS DESCRIPTION 1995

7210.30.000 Electrolytically plated with Zinc --
 --
7210.41.000 Corrugated 26,470
 20,865
7210.49.000 Other 1,624
 1,274
7210.50.000 Plated or coated with chrominum oxides or --
 with chromium and chromium oxides --
7210.61.000 Plated or Coated with aluminium zinc 13
 alloys 7
7210.69.000 Other of flat roll prod. Of iron which 127
 plated/coated with aluminium-zinc alloys 167
7210.70.000 Painted, varnised or coated with plastic 30
 21

 TOTAL 28,264
 22,334

 DESCRIPTION 1996 1997

Electrolytically plated with Zinc 323 --
 174 --
Corrugated 14,068 26,749
 11,718 27,655
Other 2,463 1,323
 1,916 915
Plated or coated with chrominum oxides or -- 19
with chromium and chromium oxides -- 31

Plated or Coated with aluminium zinc 2,841 20,170
alloys 1,907 13,360
Other of flat roll prod. Of iron which 4 --
plated/coated with aluminium-zinc alloys 2 --
Painted, varnised or coated with plastic 802 11,373
 689 2,479

 TOTAL 20,501 59,634
 16,406 44,440

 DESCRIPTION 1998 1999

Electrolytically plated with Zinc 19,574 10,332
 9,269 4,502
Corrugated 21,297 3,992
 15,057 2,065
Other 5,569 12,359
 2,978 6,093
Plated or coated with chrominum oxides or 181 1,086
with chromium and chromium oxides 259 2,326
Plated or Coated with aluminium zinc 15,122 31,958
alloys 8,599 15,962
Other of flat roll prod. Of iron which -- --
plated/coated with aluminium-zinc alloys -- --
Painted, varnised or coated with plastic 2,223 2,831
 1,708 1,930

 TOTAL 63,966 62,579
 37,870 32,893

 DESCRIPTION 2000(*)

Electrolytically plated with Zinc 13,871
 6,449
Corrugated 2,514
 1,335
Other 4,018
 2,336
Plated or coated with chrominum oxides or 2,027
with chromium and chromium oxides 2,813
Plated or Coated with aluminium zinc 12,601
alloys 6,752
Other of flat roll prod. Of iron which 21
plated/coated with aluminium-zinc alloys 15
Painted, varnised or coated with plastic 120
 85

 TOTAL 35,151
 19,770



(*) up to June 2000

Source: Data Consult

The countries of destination for the export of Indonesian zinc coated steel sheet have varied and frequently changed. In 1995, the major country of destination is Myanmar, in 1997 Singapore and in 1998 again Myanmar. In 1998, the export to the USA was quite significant although less than that to Myanmar.

Table - 7 Development of Export of zinc coated steel sheet by country of destination, 1995-1999
Country of destination 1995 1996 1997 1998 1999

China 700 -- 934 3,617 2,312
 679 -- 633 2,894 1,518

Singapore 5,111 1,247 29,051 4,310 1,309
 4,184 1,014 22,238 4,102 1,017

Myanmar 20,763 15,711 8,869 17,074 4,436
 16,338 12,993 7,541 10,362 2,264

Vietnam Rep 605 192 954 3,458 22,382
 373 136 709 2,396 11,101

USA 380 -- -- 13,381 11,683
 268 -- -- 6,906 5,390

Malaysia 131 1,122 6,349 64 200
 110 758 4,254 41 115

Philippines -- 622 3,086 397 370
 -- 325 1,875 384 335

Thailand -- 1,210 9,137 1,624 128
 -- 883 6,194 702 84

Equador -- -- -- 4,386 1,276
 -- -- -- 2,464 843

Canada -- -- -- 217 9,563
 -- -- -- 125 4,617

Others 574 397 1,254 15,438 8,920
 382 297 996 7,494 5,609

 Total 28,264 20,501 59,634 63,966 62,579
 22,334 16,406 44,440 37,870 32,893



Source: Data Consult

Increase in consumption started

The past three years (up to 1999), have seen a drastic decrease in consumption of zinc coated steel sheet due to the lack of construction activities, neither for new buildings nor for renovation, as the purchasing power of the people weakened considerably. During this period the consumption dropped from 495.794 ton in 1996 to 247.549 ton in 1998 and 242.886 ton in 1999.

In 2000, the demand from the local market started to increase particularly for low cost housing projects. The first semester of 2000, registered a total consumption of 153.181 tons.

Assuming that the stocks of product at the beginning and end of the year remain the same, the consumption of zinc coated steel sheet can be estimated as the sum of production and import minus export. Using this formula, the consumption rates are as follows:

Table - 8 Estimated Growth of Consumption of Zinc Coated Steel Sheet, 1995- 2000(*)
Year Production Imports Exports Consumption Increase
 (%)

1995 435,117 68,880 25,264 474,733 --
1996 450,907 65,388 20,501 495,794 4.43
1997 523.964 79.202 59.634 543.532 9.62
1998 220.000 91.515 63.966 247.549 -54.46
1999 250.000 55.465 62.579 242.999 -1.84
June 2000 147.800 35.151 29.770 153.181 -36.96



Source: Data Consult

In Indonesia, zinc coated steel sheets are mostly used for "roofing and sliding", and only 20% are used for deck, ducting, automotive and industrial purposes.

Competition Getting Tougher

The increasing consumption in the country has been accompanies by the tougher competition among small, medium and large producers. The competition has been shown by the aggressive war of price, not just by small but also large companies. In order to be able to offer lower prices, many producers have resorted to producing thinner zinc coated steel sheets, below the minimum thickness required by SNI ie 20 mm. Previously this strategy was adopted by small producers who-wanted to aim for the low end market. Nowadays, the large producers are following suit in order to compete for the low end market segment.

Distribution System

Normally the distribution of zinc coated steel sheets from producers to consumers is done by distributors that also act as stockists. The most common distribution channel is from producers to distributors, to retailers and from retailers to consumers. As shown in the following diagram.

In certain cases, producers can also directly supply consumers especially if the demand is substantial and for a certain period. This type of consumer is often referred to as a project. The direct supply from the factory is required by the consumer in order to guarantee continuous availability of material for example in the case of a long term project that is under implementation. Usually the transaction of purchase/sale is done through a contract for supply for a certain period.

The distribution channel from distributors direct to consumers is normally applicable for modest size projects for a period that is not too long. For projects like this, consumers can contact distributors to ensure that the supply can be guaranteed during the construction period

Procurement of raw material

The main raw material for zinc coated steel sheet is "Cold Rolled Steel Sheet" (CRC/S), which makes up 80% of the total production costs for this industry. Due to the important role of CRC/S, the industry is highly affected by the fluctuation of the price of CRC/S.

In the past, in order to protect the only producer of CRC in Indonesia ie PT Krakatau Steel, the Government applied a high import duty tariff of 22,5% including 7,5% surcharge. Through several deregulation efforts launched by the Government, in 1996, this import duty tariff was reduced to 5-10%. This has helped the zinc coated steel sheet industry considerably as the costs for purchasing the raw material could be lowered down. As we know, there are currently other producers of CRC, however, the second largest is PT Essar Dhananjaya which has a production capacity of 200.000 ton per year, still far below the 850.000 ton per year of PT KS.

Assuming that 0,964 ton CRC is required to produce 1 ton of zinc coated steel sheet,, the consumption of CRC by the industry reached 524.921 ton in 1997, 230.645 tons in 1998 and 250.467 ton in 1999.

Producers of zinc coated steel sheet normally buy their raw material directly from PT Krakatau Steel. This covered 64% of the total requirement in 1997 and 69% in 1998. The Producers of zinc coated steel sheets also have to import part of their CRC requirements due to the fact that certain specifications that are required cannot be supplied by the local producers.

It is also because the supply from the local producers cannot meet the entire demand. PT KS as the largest producer of CRC has also tried to step up export of CRC in order to gain from the depreciation of Rupiah which was the case up to 1998. Once PT KS even had to use the allocation for the local consumers.

Table - 10 Procurement of CRC/S by producers of zinc coated steel sheets by source, 1998

(ton)
 Company Total Supply Supply
 Procurement from PT from
 KS other
 producers

PT Fumira 82,275 58,082 9,248
PT Tumbak Mas 13,535 2,215 2,023
PT Bisma Narendra 1,026 1,026 0
PT BHP Steel Indonesia 28,822 17,444 9,168
PT Sarana Sentral B 628 0 0
PT Industri Galvanael Mas 14,100 1,155 0
PT Intan Nasional Ind -- 0 0
PT Kerismas Witico 45,947 42,697 2,748
Makmur
PT Wira Mustika -- 0 0
PT Kalimantan Steel Corp 15,271 15,271 0
PT Semarang Makmur -- -- 0
PT Industri Baja Garuda -- -- 0
PT Sermani Steel 19,280 12,875 0
PT Polyguna N -- -- 0
PT Dharmaputra 1,458 1,458 0
 -- 0 0
Total 222,342 152,223 23,187

 Company Coil C Import
 Distri-
 tor

PT Fumira 0 14,945
PT Tumbak Mas 0 9,297
PT Bisma Narendra 0 0
PT BHP Steel Indonesia 0 2,210
PT Sarana Sentral B 0 628
PT Industri Galvanael Mas 0 12,945
PT Intan Nasional Ind 0 0
PT Kerismas Witico 0 502
Makmur
PT Wira Mustika 0 0
PT Kalimantan Steel Corp 0 0
PT Semarang Makmur 0 0
PT Industri Baja Garuda 0 0
PT Sermani Steel 0 6,405
PT Polyguna N 0 0
PT Dharmaputra 0 0
 0 0
Total 0 46,932



Source: PT KS and field survey

In 1999, the role of the other producers beyond PT KS in supplying became stronger ie from 10% to 25%.

Table - 11 Procurement of CRC by producers of zinc coated steel sheets, 1999

(tons)
 Producers Total Total PT KS
 Prod

PT Fumira 52,707 50,810 44,610
PT Tumbak Mas 24,147 23,278 10,078
PT Bisma Narendra 13,586 13,097 0
PT BHP Steel Indonesia 57,695 55,618 41,218
PT Sarana Sentral Baja 86 83 83
PT Industri Galvanael Mas 0 0 0
PT Intan Nasional Indonesia 0 0 0
PT Kerismas Witico Makmur 67,359 64,934 54,434
PT Wira Mustika 0 0 0
PT Kalimantan Steel Corp 19,113 18,425 17,425
PT Industri Baja Garuda 0 0
PT Sermani Steel 7,090 6,835 6,835
PT Polyguna Nusantara 0 0 0
PT Dharmaputera 6,390 6,160 5,160
PT Harapan Sukses Jaya 1,357 1,308 1,308
Others 414 399 399
Total 250,359 240,947 181,550

 Producers Oth Coil C Import
 Manuf Dist

PT Fumira 6,200 0 0
PT Tumbak Mas 13,200 0 0
PT Bisma Narendra 13,097 0 0
PT BHP Steel Indonesia 14,400 0 0
PT Sarana Sentral Baja 0 0 0
PT Industri Galvanael Mas 0 0 0
PT Intan Nasional Indonesia 0 0 0
PT Kerismas Witico Makmur 10,500 0 0
PT Wira Mustika 0 0 0
PT Kalimantan Steel Corp 1,000 0 0
PT Industri Baja Garuda 0 0 0
PT Sermani Steel 0 0 0
PT Polyguna Nusantara 0 0
PT Dharmaputera 1,000 0 0
PT Harapan Sukses Jaya 0 0
Others 0 0 0
Total 59,397 0 0



Source: PT KS/and field survey.

Prospect

In Indonesia, zinc coated steel sheet is widely used for roofing and sliding (approximately 80%) and the remaining 20% for the other industries such as automotive, floor and decks, ducting and other industrial sectors. Under the circumstances, the future prospects for the zinc coated steel sheet industry will continue to depend highly on the fact whether or not the construction industry will recover in the near future

The GDP growth to the third quarter of 2000, has been quite encouraging at 4%, it is expected that it will reach 4.5% by the end of 2000.

According to observers, the property sector in general and housing in particular, will continue to grow starting from 2000 and will boom in 2004. The growth has been triggered by several factors. Firstly it is the fact that the interest rate for time deposits are no longer attractive, forcing investors to turn into the housing market. The other factor is the completion of the banking recapitalization program that enables banks to resume the provision of credits.

The interest rate for house ownership credit (KPR) is now below 20 percent, encouraging people to buy houses. The basic assumption for the expected booming of the housing sector is the projection of inflation rate from 8 percent in 2000 to 7 percent in 2001. In addition to these, the economic growth is expected to reach 5 percent, an increase from the figure of 4 percent in 2000. With all the above positive factors, it is expected that the consumption of zinc coated steel sheet will be as follows.

Table - 12 Estimated Growth of Consumption of Zinc Coated Steel Sheet, 1999 - 2005(*)

(000 tons)
Year Projected production Growth rate (%)
 tons

2000 267 15
2001 294 10
2002 338 15
2603 388 15
2004 466 20
2005 513 10



Estimates

Source: Data Consult

Despite the prospect of increasing consumption of zinc coated steel sheet, however, it appears that the growth will not be significant enough to attract new investors into the industry, at least in the coming three years.

The existing producers are currently operating at 20-40% of their production capacity and they do not plan to increase the production capacity in the coming 2-3 years. Their expectation is that the next 2-3 years will enable them to increase the utilization of the production capacity ie to 70-80% per year. Only if this happens then they will think of expanding the production capacities.
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Comment:ZINC COATED STEEL SHEET INDUSTRY REINVIGORATED.
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Nov 7, 2000
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