Low demand forces many steel plants to stop production

Low demand forces many steel plants to stop production

JAKARTA (JP): Low demand and higher production costs have
forced many local steel-related companies out of business, an
industry executive said yesterday.

The chairman of the Federation of Indonesian Steel Industries
(Gapbesi), Zainal Musa, said most steel factories were now
producing at less than 50 percent of their normal capacity
because most construction projects had been halted since the
monetary crisis started last July.

"Some steel producers have reduced production and some
factories have even stopped all their production activities,"
Zainal told members of the House of Representatives.

The country's 12 producers of welded wire mesh under Gapbesi
had stopped producing, he said.

He said six producers of billet and iron concrete in Jakarta
and another two plants in Surabaya, East Java, had also stopped
production activities.

The remaining 19 companies were currently only producing 10
percent to 30 percent of their production capacities, he said.

Zainal said two producers of iron sheets in Medan (North
Sumatra), and one each in Padang (West Sumatra), Palembang (South
Sumatra) and Jakarta had also stopped operating.

The remaining seven of the 12 members of the Association of
Iron Sheets Producers in Indonesia were only utilizing 28 percent
of their production capacities, he said.

Four out of the 11 nail and wire manufacturing factories in
the country had stopped producing, while the remaining seven
plants were only using a maximum of 40 percent of their
capacities.

The 13 companies grouped in the Association of the Iron Sheet
Truncation in Indonesia were only utilizing 10 percent of their
maximum capacity.

The 15 local producers of steel pipes in the country were only
using 15 percent of their production capacities.

Zainal said six out of the seven producers of wire rods in the
country were running at between 20 percent and 50 percent of
their capacities.

Only the state-owned PT Krakatau Steel was using up to 75
percent of its wire rod production capacity.

At yesterday's hearing, Zainal told House Commission V for
industry, mining, trade, manpower, cooperatives and the
environment that the recent high increase in electricity loan
expense tariffs had further depressed the steel industry.

He said the industry had experienced 358 percent and 370
percent increases in power bills since the government raised the
load expense tariffs in May.

Gapbesi urged the government and state-owned electricity
generator PT Perusahaan Listrik Negara (PLN) to cut the load
expense tariff rise to a maximum of 37 percent.

It demanded no more tariff rises for at least four years or
the cancellation of the plan to raise the basic electricity
tariffs.

The association also asked PLN to let the troubled factories
delay their payments of the May power bills. (das)