Posted on 27 May 2020
Steel Pipe Industry of Indonesia (Spindo) says that it estimates that Indonesian steel demand has fallen by -90% due to the Covid-19 pandemic and the impact of Ramadan. This is mainly because the Indonesian government has implemented large-scale social restrictions since March, resulting in a sudden halt in demand from the automotive and construction industries, Kallanish notes.
Spindo said that customer demand for the company's steel pipe products fell by -30% in April and by nearly -50% in May. Another steel producer, Sampurna Jaya Baja, said sales in May plummeted by -90%, while demand in March and April weakened by -50% to -60%. Silmy Karim, president of Krakatau Steel and chairman of the Indonesian Iron & Steel Industry Association (IISIA), notes that Covid-19 has reduced nationwide demand for steel products by -50% so far this year.
Over the first quarter of 2020, Indonesian steel imports fell -6.18% year-on-year to 3.22 million tonnes.
Covid-19 also has an impact on the debt repayments by customers, Spindo says. This has worsened the steel company's cash flow, which was already sluggish due to falling demand, the tubemaker adds.
Indonesian steel producers expect this effect to continue into the third quarter of this year and gradually recover in the fourth quarter.
Budi Gunadi Sadikin, the Minister of State-owned Enterprises of Indonesia, suggested that Indonesian steelmakers improve production efficiency and product competitiveness in order to gain an advantage in the competition with imported steel products. At the same time, he recommends that steel companies actively seek other profitable businesses in the market, such as healthcare and medical fields.
