Rini scraps ruling on steel import arrangement

Rini scraps ruling on steel import arrangement

The Jakarta Post, Jakarta

The Ministry of Industry and Trade has dropped an earlier ruling
which put controls on the import of steel products following
protests from local industries hit by a supply shortage at home.

Director general for the steel industry and machinery at the
ministry Subagyo was quoted by Antara that the decision to cancel
the ruling was made on Tuesday.

"The new decision is not aimed at resolving the shortage
problem, but to ease the burden of domestic industries," he said
on Thursday.

The ministry issued Decree No. 711 in January this year, which
stipulated that only producers of steel and steel products could
import the commodity. The move was aimed at protecting local
manufacturers of steel and steel products.

But the policy was strongly criticized by industries using
steel products as raw materials as it reduced the supply at home.

Steel producers have been focussing on exports as the price of
steel and steel products in the international market has surged
due to strong demand from China and Iraq.

The imbalance between supply and demand has caused the price
of steel on the international market to surge to US$420 per ton
last month, compared to $310 per ton at the end of last year.

Subagyo predicted the international price could further
increase to $450 per ton in April.

The higher international price has also pushed up the price of
the commodity at home, especially since the import of steel is
subject to an import duty of between 15 percent and 125 percent.

In addition to the high price, local industries also faced
shortages, threatening the business of the automotive and
property industry, among others, which use steel as a raw
material.

Although China is among the world's largest steel producers,
its domestic production could not fully meet local demand amid a
booming economy.

Demand from Iraq has also been strong as the country is the
process of reconstruction following the war. Analysts also said
that demand from Russia had also been quite significant amid
brisk economic development.

Steel consumption in China reached 100 million tons in 1996,
and is projected to double in 2005, according to one estimate.

Elsewhere, Subagyo acknowledged that the strong international
price would tempt local producers to export their steel products,
instead of selling them at home.

"But our office and related associations will tightly monitor
the import and export of steel," he said, but fell short of
saying whether the government would move to ban exports.