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2. EXPORTS OF POLYSTYRENE SURGING AS A RESULT OF FALLING DEMAND ON THE DOMESTIC MARKET.

After a decline in 1997, demand for polystyrene (PS) rose in international market resulting in a surge in exports in the past two years. PS consumption, however, has risen to follow the improvement of the country's economic condition.

In 1998, PS exports rose to 13,093 tons from 3,168 tons in 1997. In 1999, exports rose further to 18,376 tons valued at US$ 11.1 million. The surge in exports followed a weak demand on the domestic market as a result of the crisis.

Table - 1 Indonesia's PS exports, 1994 - 1999
Year Volume Value
 (tons) (US$'000)

1994 9,352 6,920
1995 9,343 10,821
1996 4,695 4,596
1997 3,168 2,645
1998 13,093 8,291
1999 18,376 11,063



Source: CBS/Data Consult

The United States is the largest buyer of PS resin from Indonesia. In 1999, exports to that country totaled 5,628 tons valued at US$ 3 million. Other buyers include Hongkong and China. See the following table.

Table - 2 PS exports by countries of destination, 1999
Country of Volume Value
destination (tons) (US$'000)

U S A 4,421 2,685
Hong Kong 3,281 1,612
China 2,357 1,406
Singapore 935 689
Thailand 838 511
Australia 602 404
Italy 323 184
Others 5,619 3,572

Total 18,376 11,063



Source: CBS/Data Consult

Imports decline

Until 1997, imports of PS continued to rise, but in the past two years imports declined because of falling demand on the domestic market. In 1999, imports dropped 48.4% to 6,023 tons. Imports have come from Malaysia, Taiwan, Singapore, Japan and South Korea.

Table - 3 Imports of PS resin, 1994 - 1999
Year Volume Value
 (tons) (US$'000)

1994 13,951 14,973
1995 11,645 17,217
1996 10,216 10,447
1997 16,700 15,357
1998 11,677 8,740
1999 6,023 5,199



Source: CBS/Data Consult

Four PS producing companies

Indonesia has 4 companies producing polystyrene (PS) with a total capacity of 108,300 tons a year. The first producer is PT Polychem Lindo Inc. which started operation in 1985. The subsidiary of the Bimantara Group has an annual capacity of 31,500 tons including 15,000 tons of GPPS, 9,500 tons of HIPS and 7,000 tons of EPS. Its factory is located in Serang, West Java.

PT Pacific Indomas Plastic Indonesia (PIPI) which started operation in 1993 has an annual capacity of 54.000 tons. In the beginning it was a joint venture between Dow Chemical Company of the United States and PT Hasta Kreasi of the Salim Group each with a share of 50%. The entire shares of the company with factory in Cilegon are now held by Dow Chemical Company. It was reported that its production capacity would be increased to 90,000 tons.

PT Maspion Polystyrene, a PMDN owned by the Maspion Group, started operation in 1991. The company with a factor located in Sidoarjo, East Java, has an annual capacity of 7,800 tons including 2,400 tons of GPPS, 3,600 tons of EPS and 1,800 tons of HIPS.

PT Risjad Brasali Styrindo started operation in 1995 with an annual capacity of 15,000 tons of EPS. The company set up with an investment of Rp 268 billion also produces ABS resin with an annual capacity of 15,000 tons and SAN resin with a capacity of 20,000 tons.

Table - 4 Producer of polystyrene resin and capacity, 1999

(Ton/year)
Producers Location Production
 capacity

Polychem Lindo, PT Merak, -GPPS 15,000
 West Java -HIPS 9,500
 -EPS 7,000
Maspion Polystyrene, PT Surabaya, -GPPS 2,400
 East Java -HIPS 1,800
 -EPS 3,600
Pacific Indomas Cilegon, -GPPS/54,000
Plastic Indonesia, PT West Java HIPS
Risjad Brasali Styrindo, PT Merak, -EPS 15,000
 West Java

Total 108,300



Source: Data Consult

Production up

The country's production of PS resin, like other plastic materials such as PE, PP and PVC resin, declined 20.5% to 74,410 tons from 93,500 tons in 1997. The decline was caused by soaring prices of imported basic materials.

In 1999, demand for PS from electronic industry was estimated to surge 35% resulting in an increase in capacity utilization to 80%.

Table - 5 Indonesia's production of PS, 1994-1995
Year Production Growth
 (tons) (%)

1994 52,309 30.6
1995 56,314 5.2
1996 77,600 37.8
1997 93,500 35.5
1998 74,410 -20.5
1999 90,355 21.4



Source: Department of Industry and Trade/Data Consult

Consumption down 21%

Based on a survey by Data Consult, the largest consumers of PS resin are electronic industry (35%), plastic bottle industry (16%), electrical and telephone equipment industry (12 %), automotive component industry (11%) and other industries (26%).

The country's domestic consumption of PS is assumed to be equivalent to domestic production plus import minus export. Based on that assumption, consumption peaked at 107,032 tons in 1997 or a 28.7% rise from the year before. In 1999, consumption dropped sharply 21.3% to 78,002 tons.

Table - 6 Estimated consumption of PS resin in Indonesia, 1994 - 1999

(Tons)
Year National Growth
 consumption (%)

1994 56,908 -
1995 58,616 3.0
1996 83,121 41.8
1997 107,032 28.7
1998 99,180 7.3
1999 78,002 -21.3



Source: Data Consult
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Comment:2. EXPORTS OF POLYSTYRENE SURGING AS A RESULT OF FALLING DEMAND ON THE DOMESTIC MARKET.
Publication:Indonesian Commercial Newsletter
Article Type:Brief Article
Geographic Code:9INDO
Date:May 23, 2000
Words:901
Previous Article:1. INCREASE IN CACAO EXPORT FOLLOWED BY DECLINE IN PRICE.
Next Article:3. LAST YEAR EARNING FROM SPICES EXPORTS US$ 276 MILLION.
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