Indonesia’s steel demand, similar to the other ASEAN countries, will be supported largely by the government-sponsored infrastructure projects in the midst of the COVID-19 attack in 2020, and it may reach 16.4 million tonnes in the best scenario, Widodo Setiadharmaji, executive director of the Indonesia Iron & Steel Industry Association (IISIA), shared on July 2.
If materialized, the volume will be up 3% on year from 15.9 million tonnes of steel consumption in 2019, and in 2021, the country’s steel consumption may grow further to 17 million tonnes, again in the best scenario, he shared at the 2020 SEAISI e-Conference.
The Indonesian government has panned out quite some new infrastructure projects including 49 dams, three airports, about 240 km railways, 6,346 km roads, 18,758 km bridges, housing for low-income citizens, and clean water and sanitation projects, the director spelled out when presenting, which will cost a total of $29.8 billion, or 25% of Indonesia’s total government budget for this year.
The investment, a major driving force of Indonesia’s domestic steel demand, is expected to trigger another 3 million tonnes of steel consumption in total, Setiadharmaji estimated.
However, “the realization of the infrastructure development project(s) is likely to be negatively influenced by the outbreak of COVID-19,” he warned.
In the past couple of years, Indonesia’s steel production had been on the rise to meet the growing domestic demand, and in 2019, the country’s total crude steel production reached 12.8 million tonnes, and its finished steel production totalled 10.9 million tonnes, or up 8.8% on year, he shared, though it had yet reached the full capacity.
Last year, Indonesia imported 8.4 million tonnes of steel, or up 10.5% on year.
“…Steel producers in Indonesia continued to increase their production to maximize their capacity utilization, although they also temporarily shut down some of the steelmaking operations (when needed),” he said, sharing that the domestic steel mills’ steelmaking capacity utilization averaged 60% in 2019, a five-year high or up 12 percentage points from 2018.
Indonesia has been facing the risk of overcapacity in the steel industry compared with its own domestic demand, as the country has been importing steel products too to meet the demand that cannot be produced domestically, but new steel capacities have still been commissioned, the presenter warned.
In February, a 3 million tonnes/year new billet project was commissioned in Sulawesi, and a 1.5 million t/y capacity blast-furnace steel mill in West Java is at its final stage of construction, and a 1.5 million t/y hot strip mill under PT Krakatau Steel in Banten has already completed the construction, according to Setiadharmaji.
“Steel capacity is growing with domestic steel demand, but without proper management, there is a risk of overcapacity in Indonesia,” he commented.
Mysteel Global reported that on February 21, PT Dexin Steel Indonesia blew-in the first of the two 1,780 cu m blast furnaces at its steelworks in Sulawesi.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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