Producers oppose plan to slap duty on wire rods

Posted on 18 December 2017

Source: The Jakarta Post

The Indonesian Steel Wire Industry Association (Gipkabi) is strongly opposing a government plan to impose an anti-dumping duty on imported wire rods with local producers struggling to supply a sufficient amount of the product at a high quality.

Wire rods are used in steel-wire products such as nails, wires, couplers, nuts and bolts, all of which are used in various construction projects, including infrastructure, power plant, property, automotive and oil and gas projects.

If the duty is imposed, production costs for finished products are expected to surge, which would consequently to surge, which would consequently reduce local markets’ competitiveness and force businesses to import from China.

“This is actually bixarre because China is the one that would benefit the most if the duty is imposed because it [China] would export more steel-wire products to us. In this case, wire rod producers would again nothing because we would not really be able use their products due to their low and inconsistent quality,” Gipkabi vice chairman Sindu Prawira said recently.

The production process has to be stalled at times because local wire rods have a rejection rate of up to 50 percents, Sindu said.

The Indonesia Anti-Dumping Committee (KADI) recommended on Dec. 1 that the Trade Ministry impose a 10.2 to 13.5 percent duty on wire rod imports for a five-year period. The ministry is scheduled to hold a meeting with various ministries to discuss the plan.

The 10 to 13 percent duty would increase production costs by 7 to 10 percent, according to Gipkabi. The group, which comprises 100 firms and employs around 20,000 workers, had sent a letter of objection to the ministry.

KADI issued the recommendation based on its investigation into a 2016 anti-dumping application from two petitioners: PT Ispat Indo (Ispat) and PT The Master Steel MFc (Master), Indonesia’s biggest and second biggest wire rod producers, respectively.

Aside from the recommended duty, in regard to wire rod imports, there has been a 15-percent safeguard since October 2015 and stricter import control since 2016.

“If the duty is applied, it means that the wire rod industry here is protected by triple measures while there is no protection at all for steel wire,” Sindu said.

Last year, Indonesia’s demand for steel-wire products reached 2.5 million tons, 1.8 million tons of which were produced domestically while 700,000 tons were imported, Gipkabi noted.

Indonesia Iron and Steel Industry Association (IISA) executive director Hidayat Triseputro said the new duty might be imposed to replace the 15-percent safeguard that expired next year and to stop unfair trade by Chinese exporters. 

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