Indonesia's steel demand experienced a 5% increase in 2023, reaching 17.9 million tonnes, allowing for domestic production of 14.4 million tonnes. However, steel imports have surged by 14% for all products categorized under HS 72, attributed primarily to companies other than PT Krakatau Steel.
In a significant development for Indonesia's steel industry, 2023 has witnessed a remarkable upswing in steel demand. The Chairman of the Indonesian Iron and Steel Industry Association (IISIA) and President Director of PT Krakatau Steel, Purwono Widodo, disclosed this surge, citing a consumption rate of 17.9 million tonnes, which marks a 5% increase compared to 2022.
With this level of consumption, Indonesia is now positioned to produce 14.4 million tonnes of steel within the year. However, this achievement comes with an interesting twist. While domestic steel production is on the rise, the import of steel products under HS 72 has surged by a substantial 14%. Notably, this surge in imports is primarily attributed to companies other than PT Krakatau Steel, which traditionally imports raw materials.
Analyzing the historical context, data from IISIA's official website shows that steel imports in Indonesia experienced fluctuations in the period from 2018 to 2022, significantly influenced by the COVID-19 pandemic. Before the pandemic's onset, the volume of steel imports steadily rose, reaching a peak of 19 million tonnes in 2019. However, the pandemic caused a sharp decline in 2022, with imports dropping to 14.1 million tonnes. Subsequently, there was a resurgence in import volumes in 2021 and 2022, reaching 15.6 million tonnes and 16.8 million tonnes, respectively.
Building on this upward trajectory, the first quarter of 2023 has witnessed a further increase in imports compared to the same period in 2022. Specifically, there has been a 7.7% increase, totaling 3.8 million tonnes in equivalent. These figures suggest that despite the challenges posed by the pandemic, the steel import market remains dynamic and resilient.
It's noteworthy that while import volumes have surged, Statistics Indonesia reports a 22% decrease in import value, declining from US$4.045 million in 2022 to US$3.154 million in the first quarter of 2023. This intriguing divergence between import volume and value warrants further examination.
Indonesia's steel industry is witnessing a dynamic landscape in 2023, marked by a 5% increase in steel demand. This growth, which allows for domestic steel production of 14.4 million tonnes, coincides with a 14% surge in steel imports, primarily driven by companies other than PT Krakatau Steel. The historical context of fluctuating import volumes, influenced by the COVID-19 pandemic, underscores the industry's resilience. While import volumes have risen, the discrepancy between volume and value prompts a closer examination of the factors at play in Indonesia's steel market.