India's Tata Steel Plans to Enter Indonesia with Downstream Products
Tata Steel Limited, the Indian multinational steel producer, recently announced its ambition to penetrate the Asia-Pacific region, including Indonesia. Although it remains unclear whether the company intends to establish a factory in Indonesia, an official of the company said that Tata Steel wants to enter Indonesia with downstream products in 2014 or 2015 as it sees potential in Southeast Asia's largest economy and aims to improve profitability by increasing efficiency in the operatives in the Asia-Pacific.
In 2012, Tata Steel was the world's 12th largest steel-maker with an annual crude steel capacity of 23.8 million tons. The company intends to increase production capacity to 100 million tons by 2015 through acquisitions. In 2008, it had been reported that Tata Steel was interested to acquire a stake in Indonesia's largest steel producer Krakatau Steel. However, no deal was made and not long after Krakatau Steel conducted an initial public offering (IPO) on the Indonesia Stock Exchange (previously it was a fully government-owned enterprise).
In December 2013, the global steel price was USD $570 per ton, or more or less the same as a year earlier. It remains difficult for the steel price to increase due to a chronic oversupply in China, the world's largest steel producer. However, as the economies of the USA, China and Europe are showing some signs of recovery, it may push the steel price in an upward direction in 2014.