Steel consumption in Indonesia is expected to rise to 13-14 million tons in 2016, from 11.3 million tons in the preceding year. Growth is supported by infrastructure development in Indonesia. Data from the Southeast Asia Iron and Steel Institute (SEAISI) shows that steel consumption in Indonesia rose 11 percent year-on-year (y/y) to 6.4 million tons in the first half of 2016. In fact, many local companies are currently buying steel to fill their warehouses as the steel price tends to be highest in the January-February period.
Dadang Danusiri, Co Chairman II Flat Steel Indonesia Iron and Steel Industry Association (IISIA), informed that infrastructure projects in Indonesia give rise to the nation's higher steel consumption. Projects, which are developed by private and state-owned enterprises, include toll roads and power stations. Secondly, steel demand in Indonesia's automotive industry has also been strong, accounting for about 15 percent of total domestic steel sales.
He added that domestic steel consumption could rise further provided the central government will force local infrastructure developers to use domestically-manufactured steel. China, which is plagued by steel overcapacity, has been exporting cheap steel into Indonesia. This forms a major problem for the domestic steel industry (which lacks competitiveness). In the first eight months of 2016 period China exported 3.8 million tons of steel to Indonesia. However, it is difficult to limit imports from China because both nations are members of the ASEAN China Free Trade Agreement.
Steel Consumption in ASEAN (in million tons):
Source: Southeast Asia Iron and Steel Institute