Following the trend of price increase of a number of commodities, the price of steel was predicted to increase in the near future. This was disclosed by VP Corporate Communication (Persero) Krakatau Steel, Wawan Hernawan in Jakarta Friday (13/8) in line with the tendency of turbulence at the international market lately, where the trend increasing price was clearly notable.
Without mentioning price of the future, Wawan pointed pout that the trend of price increase was already notable in China. Most likely price would increase next September.
“The trend is also indicated by the increasing price of steel raw materials like scrap and billet which was priced at US$ 300/ton three months ago, within a few short week the price has risen to around US$ 400/ton. With the increasing price of raw materials, it is almost certain that the price of end result products like hot steel (HRC) and cold steel (CRC) will also rise, although the percentage of increase is not known yet” Wawan remarked.
About the trend of world’s demand, it is estimated that the world’s production of steels might total up to 1.2 billion tons, of which China’s share alone is 600 million tons. Meanwhile the world’s demand for steel depends on the economic climate of the world. If the world’s economy shows for the better in the next three months, then world’s demand for steel would be good as well.
Upon embarking on Quarter III and Quarter IV next year, the curveline of price would again move in the positive course. The price of the world’s steel once slumped, initiated by the fall of some stock in the American stockmarket in 2008, so within 3 to 4 months the price of steel dropped to follow trend of the stockmarket.
Domestic Demand for Steel Projected to Rise between 5% to 10%
In view of the present condition, in the next Quarter IV it is expected that the condition of the steel market will undergo bullish, while the domestic condition will show increasing demand for steel between 5 to 10 percent each year.
Today production capacity of Krakatau Steel. Soon when the joint venture company between KS and Poco begins operations by 2014, it is expected that steel production would develop while the joint venture company would attain production output of 3 million tons/day.
By that time it is expected that total production of steel in Indonesia had reached 5.5 million tons the expectation is that starting from that year, Indonesia’s dependency on imported steel could be drastically minimized to 70 to 80 percent. Today Indonesia is still importing certain kinds of steel not produced at home, amounting to 8 to 9 million tons a year. Meanwhile of all the steel produced by domestic steel factories, the total national production is between 4 to 5 million tons.
The kind of steel needed is special steel used producing automotives. The needed is special steel used for producing automotives. The special steel will soon be produced by a joint venture company Posco and Krakatau Steel, capable of producing steel of maximum 2 meter thickness.
Realization of the Posco-KS joint venture is at the moment at the stage of negotiation with Posco to determine who is to manage marketing and also stipulations on how many percent of the production output is to be allocated for domestic need and how many percent for export, but it seems that the company would prioritize on fulfilling domestic need.