PT Krakatau Steel, Indonesia’s state-owned steel company, is in the process of selecting billet sources for producing automotive wire rod, Purwono Widodo, the company’s marketing director said on Wednesday, April 18, 2018.
The production of wire rod for automotive industry is part of an agreement between PT Krakatau Steel and Sango.co.
Last year, the company signed the deal with Sango.Co to produce wire rod for automotive. Sango will help PT Krakatau Steel upgrading its technology so that the company can produce own higher grade wire rod sought by the automotive industry. Additionally, PT Krakatau Steel will buy buy 40,000 tons of wire rod a year from Sango.
“First, Sango will give us an order to produce wire rod which will be processed in our facility. We’re in the middle of selecting billet sources,” said Widodo without elaborating where the company is going to source the billet.
“This will be a unique learning process for us,” he said, adding that the company expects it will be able to learn the technology this year.
Mas Wigrantoro Roes Setiyadi, president director of PT Krakatau Steel, had said the local steelmakers were unable to produce wire rod with quality suitable for automobile-making. As a result, the country’s automotive industry has to rely on imports to meet its wire rod need at about 150,000 tons annually. Indonesia’s steelmakers produce wire rod mostly for construction.
PT Krakatau Steel has installed capacity to produce wire rod of 350,000 tons per year or 20 percent of the company’s total mixed steel making capacity, according to Bisnis Indonesia report.
The agreement with Sango is part of the company’s drive to boost sales, including to automotive industry. According to the Association of Indonesia Automotive Industry, (Gaikindo), the sector grew by 3.3% in 2017, from 2016 with car production at 1,216,615 units.
Last year, PT Krakatau Steel sold around 1 million tons of HRC, a drop by nearly 16% as the company conducted an overhaul on its Hot Strip Mill for a month in May 2017 to improve the mill’s reliability, the company said in its report.
Sales of long product in 2017 declined by 42.88% to 232,565 tons, from 407,142 tons in full year 2016.
Despite lower sales, the company’s revenue rose by nearly 8% in 2017, from a year ago due to higher average selling pricem across all steel products. The company’s average selling price for HRC surged 32.68% to $597 per ton, from $450 a ton in 2016, while CRC price gained 20.18% to $672 per ton, from $559 a ton in 2016.
Hot Rolled price was expected to reach $700-$750 per ton in the end of 1Q 2018, according to World Steel Dynamics Fast Track Analysis.
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