Greater demand for machine tools seen in Indonesia

JAKARTA  --  Growth of the mining, power generation, automobile, and aerospace & defense industries in Indonesia will drive demand specialty machine tools and cutting tools, says Frost & Sullivan.

K Vinod Cartic, consultant at Frost & Sullivan, said that as the use of composite materials in the automobile industry increases, diamond-tipped tools will also grow faster vis-a-vis cemented carbide tools. Cement carbide tools are heavily used in the mining and power generation industry and steel and steel alloys are mostly used in fabrication of various components.

The use of intricate components in the aerospace & defense industry is expected to promote use of high precision tools, Mr. Cartic said.

Machine tools imported for the Indonesian automotive sector accounted for 45% of the country's total imports, he said, while the remaining came from several other sectors such as Oil & Gas (O&G), or transportation. The majority of the machine tool imports imported are from Japan and China.

He added that the heavy industry market, primarily consists of equipment and vehicles used in mining and power generation, account for the major share in terms of consumption of machine tools and cutting tools, estimated at 57.3% globally in 2012.

Investments in nuclear power generation will also have a positive effect on machine tool demand, Mr. Cartic also said. Nuclear power generates 12.3% of the electricity produced worldwide and this is expected to increase in the long term, with. Southeast Asian countries like Indonesia, Thailand, Malaysia, and Viet Nam are expected to account for 29 nuclear reactors by 2025, he added.

Mr. Cartic also predicts that the machine tools and cutting tools market in Asia Pacific is likely to grow at a CAGR (compound annual growth rate) of 9.1 per cent (2012-2017), to reach revenues worth US$6.36 billion in 2017.

"Developments in infrastructure in China and India have increased the demand for machine tools and cutting tools. China became the world's largest consumer of machine tools and cutting tools in 2002. In 2012 China also  led in production. Rapid development across various industries and investments in infrastructure are the key reason for this growth," he added.

While many countries depend on China's consumption to increase their export sales, he noted that the growth of the Indian's economy and its related industries also create a huge potential for investments in Asia Pacific's machine and cutting tools market.

Machine tools and cutting tools manufacturers are likely to benefit from sales boost with production of automobiles likely to increase tenfold in Indonesia, India and China in the next five years. Two most commonly used tools used in the automobile industry are cemented carbide and diamond cutting tools. "Diamond tools are used in the machining of lightweight non-ferrous materials such as aluminum, copper, tin and composite materials. The growing demand for these materials in the fabrication of automobile components is likely to increase the demand for diamond tipped cutting tools," he added.