Steel Exports Potentially Increase

JAKARTA – The Ministry of Industry (Ministry of Industry) predicts steel exports from Indonesia will continue to increase. This is because the stainless steel steel factory in Morowali industrial area still has expansion space.

“In Morowali, the total production capacity of nickel pig iron smelters is 2 million tons per year and 3.5 million tons of stainless steel per year, with export values reaching USD2 billion in 2017 and rising to USD3.5 billion in 2018,” said Director General of Metal Industries , Machinery, Transportation Equipment, and Electronics (ILMATE) Ministry of Industry Harjanto in his written statement yesterday.

The Ministry of Industry targets the area to be able to produce 4 million tons of stainless steel per year and have carbon steel plants with a capacity of 4 million tons per year. If the production of stainless steel is reached 4 million tons per year, Indonesia will become the second largest producer in the world or equivalent production in Europe.

“The opportunities for Indonesia’s steel product exports are getting bigger along with the opening of markets, especially in China, Southeast Asia, and countries that make bilateral agreements with Indonesia,” said Harjanto.

On the other hand, there is an increase in exports of steel products from Indonesia, especially stainless steel slab products and HRC (hot rolled coil) stainless steel. The surge in exports which has almost tripled is stainless steel HRC. Then stainless steel slabs almost doubled.

The Ministry of Industry noted, stainless steel slab exports grew from 302,919 tons in 2017 to 459,502 tons during January-September 2018, while HRC stainless steel jumped from 324,108 tons to 877,990 tons in the same period.

Harjanto said, the Ministry of Industry was determined to encourage increased production capacity of the national steel industry. Domestic steel industry production continues to be optimized and directed at the development of high value-added products. “For example, to meet the needs of the automotive sector, shipping, and railways, so we no longer need to import,” he said.

In addition, the issuance of Minister of Trade Regulation (Permendag) Number 110/2018 concerning Provisions on the Import of Iron or Steel; Alloy steel and derivative products are expected to reduce iron and steel imports, especially carbon steel products and increase stainless steel exports and the trade balance deficit in this sector is expected to decrease.

Minister of Industry (Minister of Industry) Airlangga Hartarto is optimistic that through the enactment of Permendag 110/2018, the steel industry in Indonesia will become stronger and more independent.

“The availability of imported imported steel has become Indonesia’s main cause of idling. Through the permendag, the government is trying to bring order so that its utilization can be increased,” he said.

The permendag that is effective January 20, 2019 is a substitute for Permendag Number 22/2018. The Minister of Industry said, this oversight arrangement was mainly due to the harmonized system (HS) diversion from carbon steel products to alloy steel. “Most imported products are carbon steel for construction which should be subject to 10-15% import duty,” he said.

However, because the importer added a layer of boron and chrome material, the carbon steel turned into alloy steel. Alloy steel products are subject to low import duty, namely 0-5%. This condition causes imported products to be sold at the same or even lower prices than domestic ones.

Through the revision of the Minister of Trade Regulation, the government and related parties can take precautionary measures against imported steel intending to enter Indonesia.”Yesterday it was post border and now it’s back to the border,” said the Minister of Industry.

In barrier rules, technically the supervision of iron and steel imports is again changed from post border inspection to border inspection.

Source: Ministry of Industry Republic of Indonesia