PT. CPG, Piping Supplier and Distributor of Indonesia

Steel pipes may take US$256 m blow by end of ‘09

The steel pipe industry may suffer losses of an estimated US$256 million (Rp 2.5 trillion) by the end of this year as their total production may plunge by 40 percent from last year’s realization.

Fourteen steel pipe manufacturers had decreased their production capacities by between 35 and 40 percent since early this year, and may continue to do so until the year’s end, Indonesia Iron and Steel Industry Association (IISIA) steel pipe cluster chief Untung Yusuf said Monday.

The industry produced around 400,000 tons of steel pipes last year, he said.

“This year, steel pipe production may be cut by up to 40 percent, or 160,000 tons less than the amount realized last year,” he said.

The drop in production is a result of the global economic turmoil, that has weakened global demand, including in a number of domestic infrastructure, oil and gas piping and construction projects, Untung said.

He also said global steel pipe prices averaged at $1,600 a ton last year, while refusing to disclose this year’s prices, which he said were “confidential”, fearing market volatility.

If production drops by 160,000 tons this year, and if steel pipes sold for $1,600 a ton, the industry may lose $256 million.