South Pacific awaits green light to lift fiber output

The Jakarta Post, Jakarta

PT South Pacific Viscose (SPV), the country's largest viscose fiber manufacturer, expects to increase production next year amid rising demand for fibers on both the global and domestic markets.

SPV said Friday it was negotiating with its parent company -- Austria-based Lenzing, the world's leading cellulose fiber producer -- to set up a new production plant.

"We are hoping for the green light from SPV's owners by the second half of this year," said president director Guenther J. Krohn after the inauguration of SPV's expanded wastewater treatment plant and a new waste gas treatment plant at its factory in Purwakarta, West Java.

"It's hard to convince SPV's owners as (the new line) will require a major investment," he added.

SPV, which currently produces 150,000 tons of viscose fibers per annum, is planning to operate at its full capacity of 154,000 tons per annum by the end of this year, Krohn said.

If SPV received the go-ahead from its parent, he said, it would need US$120 million to build a new plant with a capacity of another 50,000 tons of fiber per annum.

SPV, Krohn said, had increased its production capacity over the past four years from 120,000 tons per annum to the current level through a process of "debottlenecking and improving machinery efficiency without the need for a major investment."

The fiber SPV produces is used as raw material by garment and yarn manufacturers, as well as by non-woven industries like the manufacturers of beauty and medical products.

According to the Industry Ministry's director general for metal, machinery, textile and miscellaneous industries, Ansari Bukhari, who visited the factory for the inauguration ceremony, the country's two cellulose fiber producers -- SPV and PT Indo Barat Rayon -- only supplied 110,000 tons per annum to the domestic market, amounting to only half the country's demand, which amounts to some 200,000 tons a year.

SPV's Southeast Asia marketing manager Ida Purnama Sirait said the country imported its remaining fiber needs from Thailand, India, China and Taiwan, with the latter supplying the most.

Meanwhile, Ansari said he hoped the two domestic producers could further increase production and pay more attention to the domestic market as SPV only sold 60 percent of its production on the local market, and Indo Barat, which produces around 100,000 tons of fiber per annum, only sold 80 percent.

High fiber prices on the global market, he said, had encouraged producers to sell their output overseas.

Ida said that fiber on the domestic market was priced at around $1.7 per kilogram last year and $2 this year, while fiber sold on the world market for between $2.70 and $3.

"Fiber prices are rising as the prices of pulp, the raw material for fibers, are going up, combined with high global oil prices and high demand for fiber," she said.

Austrian Ambassador to Indonesia Klaus W”lfer, who was also at the inauguration ceremony, said Austrian companies had invested a total of $300 million in Indonesia, with SPV being the biggest investor.