PT Krakatau Steel, Indonesia’s state-owned steel company, has signed a long-term supply agreement with a cold-rolled coil producer, PT Essar Indonesia, as it seeks to boost its steel sales this year, PT Krakatau Steel said in a statement posted on its website, on Jan. 25.
The agreement was an extension of an existing supply deal in which PT Krakatau Steel will supply 15,000 tons of hot-rolled coil a month to PT Essar Indonesia. The delivery volume will vary depending on PT Essar’s monthly consumption, said Purwono Widodo, PT Krakatau Steel’s marketing director in the statement.
While there’s no details how long the agreement has been ongoing, PT Krakatau Steel has so far supplied a total of 1 million tons of hot-rolled coil to PT Essar Indonesia. PT Essar Indonesia would process HRC into cold-rolled coil and Galvanized Steel. PT Essar Indonesia has installed rolling capacity of 400,000 metric tons a year, which include 150,000 Mt per annum for galvanized products and 100,000 Mt for cold-rolled coil.
Widodo expects PT Essar Indonesia’s expansion will have an impact on the company’s market share.
“At least, we can meet 50% to 60% of steel demand in the downstream industry or for the consumers who have had a long-term supply agreement with Krakatau Steel,” Widodo said. The company is optimistic to meet 2018 sales target of 2.8 million tons, while remaining cautious on other possibilities from this year’s political situation. Indonesia is holding regional elections this year and is preparing for the general and the presidential elections in 2019.
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