Krakatau to resume production of three plants on lower gas price

Petromindo

IDX-listed steel maker PT Krakatau Steel Tbk plans to resume production at three plants this year following the government?s decision to lower gas price.

Krakatau President Director Sukandar was quoted by Kontan.co.id as saying Friday that the plan to resume operation of the three plants including sponge iron plant, billet and slab plant also comes ahead of the planned completion of its blast furnace facility around March.

The government?s decision to lower gas price for certain industries including steel will reduce operation cost, Sukandar said, adding that Krakatau is expected to see gas price to decline to around US$ per mmbtu from $7.5.

Krakatau suspended operation of the three plants in 2014 due to high gas price and weaker global demand for steel products. Krakatau receives gas supply of 45 mmscfd from PT Pertamina EP.

The resumption of the three steel plants would help the company meet higher steel output target this year of 2.3 million tons. Sukarndar is optimistic about the domestic market amid acceleration in infrastructure projects, and growing market of the apartment sector. (*)