Unfair pricing risks steel industry: Gapipa

JAKARTA (JP): The Association of Indonesian Steel Pipe Manufacturers (Gapipa) voiced concern on Monday over alleged dumping practices by steel pipemakers from Japan, South Korea and China, saying the unfair business practices had put the country's steel industry on the brink of bankruptcy.

The association's chairman, Warasdimulya, said the economic crisis which had been battering the country for almost two years had deeply affected the country's steel industry.

But, he said, the hardship experienced by the industry had been aggravated by the unfair competition created by the steel pipe producers from the three countries.

He therefore called on the government to impose antidumping duties on steel pipes imported from the three countries, noting the they had been flooding the domestic market with low-priced steel pipes.

For instance, Japan's steel pipe manufacturers sell their products on the domestic market for US$540 per ton, compared to $1,000 per ton in Japan.

"Gapipa does not ask for facilities ... What we want the government to do is create fair business competition. Dumping is unfair, it's no good. The government should apply antidumping rules to protect the country's steel industry," Warasdimulya said in a statement.

"Even the United States protects its steel industry. Why don't we?" he added.

According to Warasdimulya, most of the association's 15 members have been forced to reduce the number of their workers to cope with the decrease in output.

In the past, local manufacturers could utilize 80 percent of their plants' capacity to produce a total 1.5 million tons of steel pipes per year. The output has dropped to a mere 200,000 tons per year.

Warasdimulya warned that the hardships experienced by the steel industry could in turn affect the country's banking sector, which put $1 billion into financing the development of the industry.

"Local steelmakers are going on the skids. I think it reasonable to assume that they will default on their debts (to banks)," he said.

He said the country's steel pipe industry was trying to survive by exporting their products, but the move had not proved very successful.

"He have to compete again with Korea, China and Japan (in overseas markets), while the United States slaps a 67 percent import duty on imported steel pipes,"

Warasdimulya also blasted the West Natuna gas consortium for favoring imported steel pipes over locally made ones to use in the construction of its 650-kilometer underwater gas pipeline linking west of Natuna island to Singapore.

The consortium comprises Britain's Premier Oil, Canada's Gulf Resources and Conoco Corp. of the United States.

Last month, the government slapped antidumping duties of between 8.2 percent and 62 percent on certain types of construction steel imported from Russia and Poland. The surcharge will be effective for five years.

However, steelmakers from Indonesia along with dozens of other countries have been accused by the United States's steel pipe coalition of dumping practices in the country. (jsk)