PT Krakatau Steel, Indonesia’s state-owned steel company, has signed an agreement with Sango Co. to produce wire rod for automotive as it seeks to boost steel sales to the country’s automotive industry, local media reported.
Under the deal, Sango will help PT Krakatau Steel upgrading its wire rod technology. This will enable the company to produce its own higher grade wire rod required by the automotive industry, said Mas Wigrantoro Roes Setiyadi, president director of PT Krakatau Steel as quoted by media.
Indonesia’s automotive industry needs 150,000 tons of wire rod annually and manufacturers mostly import wire rod as local production has yet to meet the standard, Mas Wigrantoro said as quoted by Bisnis Indonesia daily.
As part of the agreement, PT Krakatau Steel will also buy 40,000 tons of wire rod a year from Sango.
PT Krakatau Steel couldn’t immediately reach for comments.
PT Krakatau Steel has installed capacity to produce wire rod of 350,000 tonsper year or 20 percent of the company’s total mixed steel making capacity, Bisnis Indonesia reported. Wire rod produced by the country’s domestic steel industry is mostly used for construction.
“The highest grade of wire rod in Indonesia is the cold heading, which is used to make bolts and nails, while the automotive industry needs a much higher grade than that. So we’re after the transfer of technology,” said Purwono Widodo, PT Krakatau Steel’s marketing director said as quoted by Bisnis Indonesia.
Indonesian car manufacturers produced 1.02 million units in January to October this year, rising 3.6% from 980,929 units in the same period a year ago, according to data from the Association of Indonesian Automotive Industries on its website. Domestic vehicle sales rose 2.7% to 898,244 units in January-October this year, from 874,980 units in the same period 2016.
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