Steel Industry Performance Stable in 2021

JAKARTA – The supply and demand in the domestic steel industry remains relatively balanced. Currently, the steel industry is experiencing a price hike of up to 10-20% due to the rising price of iron ore. Meanwhile, China, as one of the largest steel suppliers in the world, is attempting to reduce its supply.

"In the steel sector, we managed to decrease imports by 35% last year by applying a smart supply demand approach, which helped protect our production rate and resulted in growth," said Industry Minister Agus Gumiwang Kartasasmita during the 2022 State Budget press conference on Monday (16/8). 

As of today, the utilization rate of the domestic steel industry is at 60%. Steel exports during the first semester of 2021 reached US$9.4 billion while imports reached US$6.7 billion, resulting in a surplus of US$2.7 billion.

Minister Agus noted that the steel industry is an important economic sector that must be continuously assisted and aided by the government, through the Industry Ministry (Kemenperin) and its partnerships with other relevant ministries. A number of partnerships between government ministries have already been implemented, such as the effort to fulfill the country's local components rate (TKDN) for infrastructure projects.

These efforts were successful due to the Kemenperin's attempts at harmonization between the upstream, downstream and intermediate processes. These steps were necessary in order to continue supporting raw material production for the industry.

"We are pushing the downstreaming efforts of our natural resources and providing incentives to improve productivity. Regarding the exporting and importing of steel, we will take an approach focusing on our commodity balance sheet as mandated by the Job Creation Law (UU Cipta Kerja). For the industry in general, we have implemented an imports substitution program," Minister Agus elaborated.

The minister added that Indonesia currently has five new smelters ready to add to the country's steel production needs. These five smelters process iron ore into slabs, blooms and billets, which Indonesia is mainly importing at the moment.

"We deduced that we needed five extra smelters to help reach our steel imports substitution goal, which is at around 35% with a 2019 baseline," he said.  

The Kemenperin has also issued a compulsory Indonesian National Standard (SNI) requirement for the steel industry. There have been 28 SNI-stamped products from the industry that have been produced, which would greatly help protect the state of the steel industry and also help supervise its performance and survival in the market.