KHI Pipe to export 25% of its production

KHI Pipe to export 25% of its production

JAKARTA (JP): Steel pipe producers PT KHI Pipe Industries, a
subsidiary of the state-owned steel producer PT Krakatau Steel,
will export at least 25 percent of its production capacity this
year due to a sluggish demand in the domestic market.

The company's president, Sabungan Hutapea, said Tuesday that
in past years the company only allocated 10 percent of its output
for exports and focused its production on meeting domestic
demand.

"We will boost our exports in order to comply with a
government suggestion to boost foreign exchange earnings and also
to anticipate the decline in domestic demand due to the
postponement of many projects," he said following the launching
of the company's first bulk of its US$1 million spiral pipe
exports to Australia, India and Singapore.

Sabungan said the pipes would be used in irrigation systems in
Australia, a high-pressure gas pipelines project in India and
scaffolding in Singapore.

He said the company planned to increase its annual production
capacity from 160,000 tons at present to 200,000 tons later this
year.

KHI exported water pipes to Sudan in 1994, and scaffolding
pipes to Japan and high pressure gas pipes to Pakistan in 1995.

He said the company was not able to export its pipe products
in 1996 and 1997 due to its involvement in building a 550-
kilometer gas pipeline linking Asamera in South Sumatra and Duri
in Riau.

The company's pipes were used in a $74 million pipeline
project owned by state gas company Perusahaan Gas Negara (PGN).

Sabungan said that KHI would participate in a tender for a
280-km pipeline project owned by PGN in Sumatra.

KHI's finance director, Anwar Ibrahim, said the company's
export revenue was expected to increase in line with its
increasing export volume.

"Our profit is expected to increase by 5 percent to 10 percent
this year from Rp 6 billion last year," he said.

Sabungan said the company's profit increase was very realistic
because the company has sufficient local raw materials and does
not need to import.

He said KHI's raw materials have been supplied by PT Krakatau
Steel at normal prices, which have not been affected by the
monetary crisis.

In past years, the company supplied 70 percent of its products
to local mining, oil and gas companies, 20 percent was allocated
to supply local industrial sectors and irrigation systems, and
the remaining 10 percent was exported. (gis/msa)