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tate-owned steel producer PT Krakatau Steel expects to book a 29 percent increase in its total sales this year, to Rp 21 trillion (US$2.2 billion), as the commencement of a number of infrastructure projects is expected to increase demand.

The company’s president director Fazwar Bujang said in Jakarta on Monday that he was upbeat the steel market would improve this year due to the economic recovery, which had paved the way for the commencement of several infrastructure projects.

“In 2009, our sales dropped to about Rp 16 trillion due to the global recession. This year we expect sales to increase to Rp 21 trillion, which is close to sales in 2008,” Fazwar said.

Krakatau Steel sold about 2.11 million tons of steel in 2009, slightly lower than the 2.21 million tons the previous year. The company estimated that net profit reached about Rp 491 billion, an increase of nearly 7 percent from Rp 460 billion in 2008.

Krakatau Steel’s total assets were estimated at Rp 12.64 trillion in 2009, down from Rp 15.37 trillion in 2008.

Fazwar said the company planned to go public through an initial public offering (IPO) this November.

“The IPO will provide us wider access for financing .With the IPO, we can get funding to cover the company’s expenses for investment, which is expected to increase significantly in the future,” he said.

Fazwar refused to mention the percentage of shares planned to be sold to the public.

He said only that the House of Representatives had allowed Krakatau Steel to divest up to 30 percent of its shares. “We may divest the shares in several phases.

This will be subject to market conditions. If the market is good, the percentage of shares to be sold to the public could reach 30 percent of the shares,” said  Fazwar. Krakatau Steel estimates that domestic steel consumption will reach 9.05 million tons this year, up from 8.38 million tons in 2009.

Fazwar said the implementation of the ASEAN-China Free Trade Agreement would result in the influx of cheaper Chinese products in the country’s steel market. “The rise in the imports from China will surely hurt local producers,” he added.

He added the worst impact of the free trade would be felt by the downstream business of the industry as China could sell products at cheaper prices.

To anticipate this, he said, the government and the industry must utilize all non-tariff barriers and carry out counter measures against unfair trade such as dumping practices and non-standard products.