US Tariff on Canada Impacts Indonesian Steel Exports
Krakatau Posco Plant in Cilegon, Banten - Photo by Krakatau Steel

JAKARTA (TheInsiderStories) – State-owned steel producer PT Krakatau Steel Tbk Persero (IDX:KRAS) set a 40 per cent higher sales volume target for 2018, to 2,8 million tons by 40 percent to 2,8 million tons in 2018, driven by an expectation of better domestic steel demand.

In 2016, domestic demand for steel reached 12,7 million tons. This requirement is projected to continue to increase in the coming year, averaging an annual rise of 1 million tonnes of steel.

Krakatau Steel Corporate Secretary Suriadi Arif said, in 2016 steel prices begin to bounce; this condition rallies in 2017.

“The price of steel continued to sag from 2011 to 2015. The price of HRC domestic CFR in December 2017 has reached US$562 / MT sharply increased 260 per cent from December 2015 which only reached 216 / MT”, said Suriadi Arif in a written statement, Wednesday (24/1).

Nevertheless, pressure on cost of production is still sufficiently affected by high energy costs such as gas and electricity.

Indonesia, Southeast Asia’s largest economy, is expecting sizeable demand for steel for infrastructure projects, shipbuilding and the automotive industry in the coming years.

Domestic steel consumption is expected to surge by between 6 per cent and 9 per cent this year from the 10.4 million tons estimated last year, according the Indonesian Iron and Steel Industry Association.

At present, the country imports between 35 percent and 40 percent of the total annual demand for steel due to limited capacity in the local industry.

In 2016, Indonesian domestic steel supply reached 5 MT, while demands of steel reached 15 MT. There is still gap between demand and supply. In addition, steel consumption remains low at 50 kg per capita, far lower than other ASEAN countries.