Indonesia's steel demand to hit 125 mn t pa by 2050

Indonesia's apparent steel consumption will grow in line with its economic growth and may reach 125 million tonnes/year by 2050, Widodo Setiadharmaji, executive director of the Indonesian Iron and Steel Industry Association, shared the estimation based on the projection of PriceWaterhouse Cooper (PwC) on the Indonesian economy at the SEAISI 50th Anniversary e-Conference & Exhibition on June 17.

At present, "the steel production capacity is sufficient to fulfill domestic demand," he confirmed, adding, though, that massive investment in the domestic steel capacity will be required to fulfill the growing demand if Indonesia, as PwC projects, grows into the world's fourth largest economy after China, India, and U.S. by 2050.

He did not share the near-term steel demand outlook, just commenting that the domestic steel capacity utilization should be increased steadily over 2021-2025.

As for supply, in the next five years, Indonesia's carbon steel capacity may grow by over 20 million tonnes/year based on the few investment plans announced by the few companies from China and South Korea due to China's steel capacity trimming and Indonesia's great market potential for steel.

The speaker, however, warned the risks of excess steel capacity in the country or in the ASEAN region, and to prevent this and any harm to the domestic steel producers, any new capacities should be aligned with the domestic demand growth.

In contrast, the country's stainless steel capacity expansion will be limited by the nickel ore availability in the coming years, even though Tsingshan and Jiangsu Delong had been investing in nickel smelting plants in the past four to five years so as to become the world's low-cost stainless steel producers, he said.

Nickel is now a rather hotly-pursued nonferrous metal that is used not only for stainless production but also battery cells.

Meanwhile, Indonesia is still a net steel importer especially for carbon steel including hot-rolled coil, cold-rolled coil, and coated sheet due to the low utilization of its existing capacity with the lack of competitiveness against the imports and overcapacity of some steel products, he explained briefly.

In 2020, the capacity utilization of the country's steel industry averaged 53%, though this had been up 10 percentage point from 2019 thanks to higher exports of some steel products and the government-invested construction projects, according to him.

Last year, Indonesia imported 9.7 million tonnes of finished steel with 9.3 million tonnes being carbon steel, while it was a net stainless steel exporter with the total volume at 2.9 million tonnes, or 51% of the country's total steel exports.

Written by Nancy Zheng, zhengmm@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.