The Indonesian Olefin, Aromatic, and Plastic Industry Association\n(INAPLAS) has revealed that the massive influx of cheap imported\nproducts, the weakening exchange rate, and issues regarding energy\npricing and supply are major challenges facing the national\npetrochemical industry.<\/p>\n
In a statement in Jakarta on Friday, INAPLAS Secretary General Fajar\nBudiono explained that gas is a vital component in the petrochemical\nindustry, particularly in cracking and polymerisation processes. He\nnoted that while the Specific Natural Gas Price (HGBT) scheme previously\nhelped maintain competitiveness by keeping prices at around 6-7 US\ndollars per MMBTU, current offers have risen to between 1-5 and even 20\nUS dollars per MMBTU. In several ASEAN nations, industrial gas prices\nremain below 9 US dollars per MMBTU, making foreign products more\ncompetitive.<\/p>\n
Furthermore, Fajar stated that the industry\u2019s challenges are\nintensifying as plastic and petrochemical products from China continue\nto flood the domestic market at prices that local producers struggle to\nmatch. \u201cChina is currently entering markets very massively. In\nIndonesia, we estimate that Chinese goods could reach up to 300,000\ntonnes per year,\u201d said Fajar.<\/p>\n
This influx of cheap imports has forced domestic companies to\nsacrifice profit margins to maintain market share, with some factories\neven reducing production utilisation levels. \u201cWe are currently\nattempting 75 per cent utilisation, trying to stay slightly below\nChinese prices. Consequently, we are eroding our margins quite\nsignificantly,\u201d he added.<\/p>\n
On the other hand, the weakening Rupiah is adding further pressure as\nthe cost of importing raw materials increases. However, these rising\ncosts cannot be fully passed on to selling prices due to intense\ncompetition from imports. This pressure is also felt by downstream\nindustry players or converters who imported raw materials when prices\nwere high, only to see market prices drop sharply upon arrival in\nIndonesia.<\/p>\n
Yusuf Rendy Manilet, a researcher at the Centre of Reform on\nEconomics (CORE) Indonesia, assessed that the petrochemical industry is\ncurrently facing three simultaneous pressures: the surge in global raw\nmaterial prices, the weakening Rupiah, and gas supply issues. According\nto Yusuf, conflicts in the Middle East have driven naphtha prices up by\nmore than 50 per cent compared to pre-tension levels. He noted that the\nprimary issue with industrial gas is not just the price stipulated in\nthe HGBT policy, but the limited supply available to the industry, which\ncauses price discrepancies. Due to these combined pressures, domestic\nplastic product prices have seen significant increases, with some rising\nby 40 to 60 per cent as of April 2024. Yusuf suggested that increasing\nproduction capacity through new domestic petrochemical complexes could\nhelp reduce import dependency.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/inaplas-reveals-import-influx-and-energy-supply-as-major-challenges-1780814540", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }