President Joko Widodo (Jokowi) will instruct reduction in gas price in one month. Which industries would feel the upbeat?
Jokowi requested to lower the gas industry price to USD 5-USD 6 per MMBTU. Indonesia’s competitiveness in several industries that consume large amounts of gas, such as fertilizer, petrochemical, ceramics, steel, glass and mirror, cement, and latex gloves, will increase if the cut back is effective. The gas needs will be high in 2020, especially for petrochemical (see table).
Krakatau Steel (Persero) tbk (KRAS) and Gunawan Dianjaya Steel tbk (GDST) is looking forward to the price decrease. Currently, KRAS and GDST have been suffering significant losses due to the gross profit margin. The energy cost in steel industry reached 40% from COGS, which would be cheaper if gas was used.
The ceramic industry is also optimistic. Several listed companies in IDX endured losses for years, especially Mulia Industrindo tbk (MLIA) and Pelat Timah Nusantara tbk (NIKL), a tin plate company that requires a lot of energy to process tin.
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