Industry Profie: Stain Less Steel in Indonesia

MARKET INTELLIGENCE REPORT ON

THE MARKET OF STAINLESS STEEL ROD, BARS AND WIRES IN INDONESIA

September 2009

Background

The market for stainless steel rod, bars and wires has in the last few years developed markedly following the development of their industrial users particularly welding electrodes, bolt and nuts, gaskets, springs and steel furniture. However, the country still strongly dependent on imports as there is no domestic production on stainless steel rods and bars.

Stainless steel rod is the hot rolled feed produced in coil and purchased by the downstream drawers. This product is then cold drawn down to wire or bar with diameters, properties and finishes suitable for further processing in industrial applications.

Stainless steel bar comprises numerous products referred to by the shape, the section dimension, grade, condition and surface finish. Shapes and section measurement.

The market size rose sharply in 2008

The market size of stainless steel bars which are reflected from the size of imports rose steadily from only around 8 thousand tons in 2001 to 17.8 thousand tons in 2005. Since then it fluctuated with strong upward trend. In 2006 the market totaled around 34,000 tons, declined to around 24 thousand tons in 2007, but recovered strongly to around 56 thousand tons in 2008.

In terms of value, total market of stainless steel bars and wires is estimated at US$ 92.4 million (CIF value) in 2008. Import dominated by bars and wires of HS No.722100 (Bars and rod of stainless steel, hot rolled in irregularly wound coils) and HS No. 722220 (bars and rod of stainless steel nfw than cold formed or cold finished).

The main grades of stainless steel bars and wires imported are SS 304 (69 %), SS 316 (12 %), and special grade (8%).

Around 70% of SS 304 is imported by direct end users and only 30% by traders/ stockiest. Major importing end users include wire/welding electrode manufacturers (PT Alam Lestari Unggul, Avesta welding, Sumiden etc), zipper manufacturers (YKK Zipper), Furniture manufacturer (Kingfurn International), bolt and nut manufacturers(Moon Lion Industries, Sagateknindo) .

Largest importers of stockiest are PT Sutindo Raya Mulia Special grades are mostly imported by direct users (93%) including PT Goodrich Pindad Aeronautical, PT MCI Prima Gasket etc.

Strong import since 2005

The domestic market is highly dependent on imports of stainless steel rod, bars and wires . Imports have indicated a remarkable growth since 2005 up to 2008 with an average growth of 65 % a year . This growth was influenced by the development in the downstream industry such as in wire and welding electrodes, steel furniture, bolt and nut industries.

Imports of stainless steel rods, bars and wires have developed steadily from around 8 thousand tons in 2001 to 17.8 thousand tons in 2005 , rose sharply to around 34 thousand tons in 2005 and 56.4 thousand tons in 2008.

In terms of value, the growth of import was even higher due to soaring stainless steel price. In 2001, the total import value of stainless steel rods, bars and wires was only US$ 10.6 million while in 2008, it almost rose ten times to US$ 92 million. HS 722 300.00 (Wire of stainless steel ) is the main types of bars and wires imported into Indonesia. Import of this product totaled US$ 27 million or 30 % of total import.

Market dominated by SS 304 Grade

SS 304 grade is dominant in imports of stainless steel bars and wires accounted for 69% of total imports, followed by SS 316 (12.2%) and Special grade (8.3%).

Major importing end users like PT Alam Lestari Unggul (welding electrodes industry) and PT Avesta Welding (welding electrode industry) used different grades such as SS 304, SS 316 and special grade. However, the main grade used by these companies is SS 304. In the meantime, SS 316 grades are also used by gasket manufacturer and synthetic fibre manufacturer.

End-user importers have significant role

Importers of bars and wire stainless steels consists of traders/ stockiest and end-users. Role of end users are significant in most popular grades i.e. SS 304 , SS 316 and special grades.

Major end users like PT Alam Lestari Unggul and PT Avesta Welding (welding electrode industry) used different grades such as SS 304, SS 316 and special grade. However, the main grade used by these companies is SS 304. In the meantime, SS 316 grades are also used by gasket manufacturer and synthetic fibre manufacturer.

Key players in importing SS 304 grade bars and wires include PT Alam Lestari Unggul, PT Sutindo Raya Mulia, and PT Avesta Welding.

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