DEVELOPMENT OF STEEL INDUSTRY IN INDONESIA

Indonesia will deficit on steel supply on 2009. Steel consumption in the next 3 years will need 11.7 million tons, instead of local steel production only 5.7 million tons.

Lack of steel supply on hot rolled coil (HRC) and cold rolled coil (CRC) is done since 2001. In 2001 local consumption was 3.25 million tons, instead of local production only 2.16 million tons. So lack of supply around 1.08 million tons was supplied by import. Lack of steel local supply, because of there is no new investment or expansion for steel mill or manufacturer since 1998.

Steel local producer only produce steel for construction supply. Meanwhile, the biggest local need of steel is for automotive industry, such as electrical galvanized and galvanic. Consumption of this kind of steel increase very significant for 32% in the year 2003-2004. This cause of national automotive industry increases their production.

To solve lack of steel supply in Indonesia, the government since April 2004, reduce steel products import duty to 0%, such as hot rolled coil/ plate (HRC/P). Because of that local demand on steel product continue to increase, in 2004 local consumption increase to 4.2 million ton from 3.18 million tons in 2003. Also in 2005 local consumption increase to 4.3 million tons.

Increasing on local consumption is not followed by local production. In 2002 local production of HRC/P reach 1.62 million tons, otherwise local production continue to decrease to 1.52 million tons in 2003 and 1.32 million tons in 2004. Local consumption of HRC/P in 2004 mostly for produces CRC (36.9%) and pipe industry (23.3%). The other is for produce steel profile (14.6%), shipbuilder (2.1%), and automotive (2.1%).