Steel imports in Indonesia will be limited, good news for issuers in the steel sector
The government is attempting to withstand the potential for domestic imports due to the effects of trade wars, including imported steel products. One way is to apply non tariff barriers.
The entry of imported steel products will certainly affect the performance of metal issuers such as PT Krakatau Steel Tbk (KRAS), PT Gunawan Dianjaya Steel Tbk (GDST), PT Beton Jaya Manunggal Tbk (BTON) and PT Saranacentral Bajatama Tbk (BAJA).
Binaartha Parama Securities analyst Muhammad Nafan Aji Gusta said the non-tariff policy of the barrier to be issued by the government aims to protect domestic industrial products. “Because our export level is less than imported, this policy is automatically required by the government to anticipate no deficit on the trade balance,” he said on Tuesday.
Nafan said that as goods such as steel, commodities, food and electronics could be produced domestically, policies to reduce imports needed to be done. “Provided that local entrepreneurs are able to maintain the quality of their products so as to compete in the domestic market,” he explained.
Regarding shares of steel companies, Nafan recommends buying KRAS shares with long-term price target at Rp 755 per share. Tuesday (31/7), KRAS share price recorded Rp 410 per share or down 10.87% from the previous day.
He also recommends buying BTON shares. “As long as price movements stay above the 252 level, we can buy short-to-medium term targets at Rp 344 per share,” Nafan said. BTON share price on Tuesday (31/7), up 2.16% to the level of Rp 284 per share
As for BAJA and GDST, Nafan recommends wait and see because technically the stock movement is still not good.
KRAS Marketing Director Purwono Widodo said the non-tariff barriers policy plan to reduce imports will be a positive sentiment for KRAS. “This will greatly assist KRAS as it will reduce the steel imports indicated by circumvention such as alloy steel from China,” he explained, Tuesday (31/7).
Purwono said, so far there is an increase in steel imports with cheap prices in the form of alloy steel indicated circumvention resulting in unfair trade or damage to domestic market prices.
Prevention can not be in the usual way because they use the loopholes of existing rules. “Well, if there is a government policy aimed at preventing or reducing the imports would certainly help KRAS and the domestic steel industry,” he added.
According to him, the impact of this policy will make the volume of steel imports sold KRAS will be reduced and expected steel prices in the domestic market will return to normal. “Yes, if the import of cheap alloy steel is reduced, then KRAS can maximize the utilization of steel production capacity in the country,” said Purwono.