Probe Into Cheap Imported Steel Leaves Buyers Worried
Faisal Maliki Baskoro. The Jakarta Globe, Jakarta - 27/06/2011
The government has launched a probe into allegations that imported steel-coil products were being sold at bottom-dollar prices, potentially constituting an act of illegal dumping.
“We just started the investigation following reports from local steel industries, represented by state-controlled Krakatau [Steel], that they were suffering losses in competition to cheaper steel products from five countries,” Indonesian Anti-Dumping Committee (KADI) Chairman Muchtar said. The cold-rolled coil at the center of the allegations came from Japan, South Korea, Taiwan, China, and Vietnam, he said.
“To be considered dumping, there must be a margin of at least 2 percent between the selling price here and their countries of origins,” Muchtar said, without providing prices in Indonesia or abroad.
“Based on Krakatau’s report, there are potentially cases of dumping, but we need to cross-check the data with the exporters. We don’t know how long this process is going to take.”
Muchtar said that during the time of the investigation, export and import activities would continue as usual, with no additional duty on imported cold-rolled coil for now.
Cold-rolled steel coil is a manufacturing input predominantly used in the automobile sector, pipe-making and furniture.
Wawan Hernawan, Krakatau’s corporate secretary, said the company reported possible dumping based on a surge of imported steel in the last two years. “We want a speedy resolution,” he said. “The longer it takes, the more apparent will be the impact on local industries.”
According to official statistics, steel imports by value in 2009 fell by 38 percent to $7.2 billion. However, in the first 11 months of 2010, steel imports rose by 40 percent to $8.89 billion.
The Indonesia Iron and Steel Association forecasts steel demand rising by an average 9 percent annually. Steel demand last year was around nine million tons, with imports accounting for 35 percent.
Johnny Darmawan, president director of Toyota Astra Motor, a unit of top auto-maker Astra International, said that if the government decided to ban or apply a higher tax rate to imported steel, the company’s expansion would slow, potentially hurting the country’s economic growth.
“Astra uses mostly imported steel because of our specifications, and the price meets our standards,” he said. “A price increase would mean higher production cost, and this would eventually hurt consumers’ purchasing power.”
Johnny said that the government should consider carefully whether the local steel industry could cope with the manufacturer’s demand, “but first, they must prove the dumping practice.’’
Purbaya Yudhi Sadewa, chief economist at the Danareksa Research Institute, said that this dumping case should serve as an opportunity for local steel industries to expand.
“This is a signal for local steel industries to expand themselves,” Purbaya said. “Expansion could offset increasing prices.” He also said that in order to ensure quality, the government should enforce its National Standardization System.
He said Krakatau’s $6 billion joint venture with South Korea’s Posco could help bridge the import gap significantly.