^ Indonesia is among the lowest cost producers globally

Article By Peter Cranfield, WBMS consultant
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Chart 1 shows the exports of 2.3 Mt in 2019 by shape. By far the majority, nearly three quarters, is hot band for rerolling, 16% is cold rolled coils whilst slabs and billets are 12%. Slabs and hot band are primarily going to stainless producers for rolling. CR coils are primarily for service centres and end users although some may be for further working.

Chart 2 shows the growth in exports by shape over the 3 years the Sulawesi plant has been operational. Bearing in mind the plant started up half way through 2017, the growth has been rapid. In 2017 there was very little cold rolling and exports were equally split between slabs and hot band. In 2018 the growth was mainly in hot band. In 2019 the growth continued in hot band but there were fewer exports of slabs. Investment in a hot rolling mill is substantial so it makes sense to use this facility and export to plants in Asia which have cold rolling but no hot rolling capability. CR fl at exports continued to increase which increased pressure on existing producers.

Chart 3 shows Indonesian exports in 2019 by destination. Taiwan overtook China as the largest importer and the impact was clear in the fall in slab production in Taiwan. Most of the other destinations are in Asia where there are cold rolling facilities. The only non-Asian destination of any note is Italy.

Chart 4 shows the development by country over 3 years. China appears to have taken a break in 2019 with reports of inventory building in the previous year. As mentioned, the rise in Taiwan has been at the expense of domestic melt production. The growth in Asia has been common to most of these countries where the cold rolling facilities are in place. Clearly the Indonesian operations have been very successful and are low cost. With the question in 2020 being how far will global economies contract, the impact on Indonesia’s ability to export is one to watch.

Meet the Author

Peter Cranfield has a BSc (Econ) from London University and an MBA from Warwick. He started his career at Inco serving as market research manager and also producing the annual publication World Stainless Steel Statistics (in 1986 taken over by WBMS). Later he joined Shell-owned Billiton in The Hague for 15 years working in a number of metals and industrial minerals as well as strategic planning. Peter then moved back to London with BHPBilliton working in business planning and analysis in nickel, cobalt and stainless. He has regularly delivered presentations on nickel and stainless at conferences around the globe. Since retiring he has consulted for BHPB, Nickel Institute and now the UK-based World Bureau of Metal Statistics.

Peter Cranfield

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