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    1Aug, 2018
    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.

    (Source: Kontan)

    23Jul, 2018
    China probes stainless steel imports from Indonesia, EU, Japan and Korea

    China on Monday launched an anti-dumping probe into stainless steel imports worth $1.3 billion, including from a privately owned Chinese mill with operations offshore, after complaints that a flood of product has damaged the local industry.

    The Commerce Ministry said on Monday the investigation will target imports of stainless steel billet and hot-rolled stainless steel sheet and plate from the European Union, Japan, South Korea and Indonesia, which nearly tripled last year.

    The move follows a complaint by Shanxi Taigang Stainless Steel (000825.SZ), with backing from four other state-owned mills including Baosteel’s stainless steel division, which blamed cheap imports on falling prices, it said.

    China makes and consumes around half of the world’s stainless steel, which is used to protect against corrosion in buildings, transportation and packaging.

    While the complaint targets eight foreign producers, it also lists a number Chinese companies, including the Indonesian unit of one of the world’s top producers, Tsingshan Stainless Steel, and 19 traders who import product.

    Some private Chinese companies have opened or started building plants in Indonesia in recent years, drawing on its plentiful nickel resources and lower-cost of production.

    A significant portion of the new production has been sold in China, analysts say.

    The rapid increase in imports damaged the Chinese market, according to the complaint filed by Shanxi Taigang and released with the commerce ministry document.

    Almost two-thirds of China’s stainless imports came from Indonesia last year, up from 5 percent in 2016 and zero in 2015, the complaint said. That rose to as high as 86 percent in the first quarter, it said.

    Imported prices of the stainless steel products fell 23 percent to $1,867 a ton in 2017 from $2,436 a year earlier.

    “If we allow these products to continue to enter the Chinese market with low prices and take more market share, sales of China’s domestic products will continue to decrease,” the complaint said.

    Peter Peng, senior consultant at CRU in Beijing, said the investigation was “totally driven by an industrial dispute between SOEs (state-owned enterprises) and the fast-growing private mills.”

    “Due to their cheap production costs, it’s more competitive than Chinese products,” he said.

    Tsingshan opened a mill there last year with annual capacity of 3 million tonnes while Delong Holdings (DELO.SI) plans to start production there next year.

    (Read More: Reuters)