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Imports dampen performance of local steel industry.

The country's steel industry is estimated to operate only at 40%-50% of its capacity in the first half of this year or the lowest in the past three years. Large imports of downstream steel products were blamed mainly for the poor performance of the industry. Based on data at the Indonesia Association of Iron and Steel Industry a decline in capacity utilization was recorded in all sectors of the industry. The billet producers are estimated to produce only 1.34 million tons or 38.2% of their total capacity and concrete reinforcing steel producers are expected to turn out only 929,196 tons or 31.8% of their capacity in the first half of the year. Deputy chairman of the association Irvan Kamal said the country's steel industry could not increase production on weak demand. Meanwhile it was reported that the prices of steel sank to the lowest level in the past 12 months. The prices of hot rolled coils plunged 64.88% in May from July's peak of US$1,125 per ton. Steel industry in the country has cut 24,000 jobs in the past nine months as a result of the global financial crisis, the Indonesia Iron and Steel Industry Association (IISIA) said. At least 12% of 200,000 workers in steel industries have lost their jobs since the last quarter of 2008 as factories cut production on weak demand, Irvan said. He blamed large imports partly for the falling sales of local products, which could not match imported products in price competition. He said imported products especially from China are sold 25% cheaper than local products as the Chinese government provides export tax incentive.
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Publication:Indonesian Commercial Newsletter
Date:May 1, 2009
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