News

2024 Industry Performance Review

Production Capacity and Output Achievements

According to the latest data from the Indonesian Iron & Steel Industry Association (IISIA), Indonesia's steel production in 2024 was projected to reach nearly 16 million tonnes, continuing the steady growth trend of recent years. This achievement marks that Indonesia has largely met most of the 17 million tonnes capacity target set for 2024 in the National Industry Development Master Plan (RIPIN).

Export Trade Breakthrough

Indonesia's steel industry achieved a historic breakthrough in international trade. According to Trade Minister Zulkilfi Hasan's announcement in July 2024, Indonesia has risen to become the world's fourth-largest steel exporter by value, a significant improvement from its 17th position in 2019.

Export Data Highlights:

• 2023 steel exports: USD 27.5 billion (3.5x growth from 2019)
• 2023 imports: USD 13.4 billion
• Trade surplus: USD 14.1 billion
• Share of national trade surplus: Nearly 40%

Capacity Utilisation Improvement

Despite facing challenges, Indonesia's steel industry capacity utilisation showed improvement trends. According to a December 2024 report by CREA (Centre for Research on Energy and Clean Air), the overall industry capacity utilisation reached 62% in 2023, significantly improved from the average 45% in 2019.

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Investment and Capacity Expansion

Surge in Basic Metal Investment

Indonesia's basic metal industry investment showed explosive growth. According to the Investment Coordinating Board (BKPM) data, investment in basic metals, non-machinery metal products and related equipment grew from USD 14.8 billion in 2020 to USD 37.7 billion in 2023, increasing 2.5-fold in just a few years.

Major Investment Projects

IFC Investment Project

In September 2024, the International Finance Corporation (IFC) announced a loan of up to USD 60 million to PT Gunung Raja Paksi Tbk (GRP) to support the company's expansion of low-carbon flat steel production. This investment will utilise Electric Arc Furnace (EAF) technology and is expected to reduce greenhouse gas emissions by more than half.

Major Expansion Plans

According to Global Energy Monitor (GEM) data, Indonesia's total operational and planned crude steel capacity is expected to exceed 45 million tonnes, far surpassing the 2035 target of 25 million tonnes. Ongoing and announced expansions will double the country's current crude steel production capacity.

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Technology Development and Environmental Challenges

Current Production Process Status

Indonesia's steel industry currently still primarily relies on the traditional Blast Furnace-Basic Oxygen Furnace (BF-BOF) technology route. According to CREA report analysis:

Current Technology Distribution:

• Ironmaking capacity: 100% uses coal-based blast furnace technology
• Crude steelmaking: 58% uses BOF, 42% uses EAF
• Planned new capacity: 93% planned to use BOF technology

Decarbonisation Technology Challenges

Compared to other Southeast Asian countries, Indonesia faces gaps in low-carbon technology application. Vietnam and the Philippines have planned 17.2 million tonnes and 12.8 million tonnes of EAF capacity respectively, while Indonesia has only planned 1.7 million tonnes, reflecting the urgency of technology transformation.

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Market Demand and Consumption Structure

Domestic Consumption Growth

During 2015-2023, Indonesia's steel consumption grew steadily at an average growth rate of 5.4%. In 2024, Apparent Steel Consumption (ASC) is forecast to reach 18.3 million tonnes, while domestic production was 15.9 million tonnes, with 45% for exports.

Major Application Sectors

Construction & Infrastructure (approx. 50% market demand)

The new capital Nusantara (IKN) construction project is expected to require approximately 9.5 million tonnes of steel worth over USD 9.7 billion. Additionally, the Cirebon-Semarang gas transmission pipeline project will utilise approximately 28,000 tonnes of steel pipes.

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Policy Environment and Regulatory Framework

Localisation Policies

The Ministry of Industry is promoting increased local content rate (TKDN), with current steel products having 40-65% local content, aiming to increase metal products' local content rate to 85%.

Trade Protection Measures

Facing challenges from surging Chinese steel imports, the government has implemented multiple measures:

• Import substitution programmes
• Mandatory National Standards (SNI)
• Anti-dumping measures
• Specific natural gas price incentive policies

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2025-2035 Development Plan

Capacity Targets

According to the National Industry Development Master Plan (RIPIN 2015-2035), Indonesia has set ambitious capacity development targets:

• 2024 target: 17 million tonnes annual capacity (largely achieved)
• 2035 target: 25 million tonnes annual capacity
• Actual projection: Total operational and planned capacity exceeding 45 million tonnes

Technology Transformation Pathway

Low-Carbon Technology Development Focus:

1. Electric Arc Furnace technology promotion - Increase scrap utilisation to 75-100%
2. Direct Reduced Iron (DRI) technology - Reduce dependence on coking coal
3. Renewable energy integration - Support clean EAF operations
4. Circular economy model - Improve steel recycling rates

Investment Requirements and Financing

To achieve decarbonisation goals and capacity expansion, Indonesia's steel industry faces enormous investment requirements. According to Global Energy Monitor estimates, BOF capacity under construction faces USD 17-26 billion in stranded asset risks, emphasising the urgency of transitioning to low-carbon technologies.

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Challenges and Opportunities

Major Challenges

1. Insufficient capacity utilisation - Only 62% in 2023, still gap from healthy 80% threshold
2. Technology pathway lock-in risk - Over-reliance on high-carbon BF-BOF technology
3. Intensified international competition - Pressure from low-cost Chinese steel imports
4. Stricter environmental regulations - Impact of international environmental policies like EU CBAM

Development Opportunities

1. Infrastructure construction demand - Major projects like new capital construction bring huge markets
2. Enhanced export competitiveness - Already become world's fourth-largest steel exporter
3. Green steel development - Growing international demand for low-carbon steel
4. Regional supply chain integration - Core position in Southeast Asian steel supply chain

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Conclusions and Outlook

Indonesia's steel industry achieved remarkable success in 2024, with outstanding export performance and continued investment growth. However, facing the global steel industry's trend towards low-carbon technology transformation, Indonesia needs to accelerate technology upgrading and balance capacity expansion with environmental protection.

The next decade will be a critical transformation period for Indonesia's steel industry. Through policy guidance, technological innovation and international cooperation, Indonesia is expected to build a modernised steel industry system with international competitiveness by 2035, providing strong support for sustainable economic development.

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参考文献 / References

1. Indonesian Iron & Steel Industry Association (IISIA). (2024). "Production volume of steel in Indonesia from 2016 to 2022, with forecasts until 2024." Statista, January 3, 2024. https://www.statista.com/statistics/1467027/indonesia-steel-production/
2. Centre for Research on Energy and Clean Air (CREA). (2024). "Indonesia iron and steel's full potential hinges on low-carbon technologies." December 18, 2024. https://energyandcleanair.org/wp/wp-content/uploads/2024/12/EN-Report_CREA_Indonesia-iron-and-steels-full-potential-hinges-on-low-carbon-technologies.pdf
3. Ministry of Trade, Republic of Indonesia. (2024). "Indonesia ranks fourth as world's largest steel exporter." Press Release, July 11, 2024.
4. International Finance Corporation (IFC). (2024). "IFC Promotes Decarbonization of Indonesia's Steel Sector with Investment in Gunung Raja Paksi." Press Release, September 6, 2024. https://www.ifc.org/en/pressroom/2024/ifc-promotes-decarbonization-of-indonesias-steel-sector-with-inv
5. Global Energy Monitor (GEM). (2024). "Pedal to the Metal 2024: Global Steel Plant Tracker." July 16, 2024. https://globalenergymonitor.org/report/pedal-to-the-metal-2024/
6. Indonesia Investment Coordinating Board (BKPM). (2024). "Investment Realization by Sector Period 2010 - June 2024." https://bkpm.go.id/id/info/realisasi-investasi
7. World Steel Association. (2024). "December 2024 crude steel production and 2024 global crude steel production totals." January 24, 2025. https://worldsteel.org/media/press-releases/2025/december-2024-crude-steel-production-and-2024-global-totals/
8. Ministry of Industry, Republic of Indonesia. (2015). "National Industry Development Master Plan (RIPIN) 2015-2035." https://kemenperin.go.id/ripin.pdf
9. 6Wresearch. (2024). "Indonesia Steel Market (2024-2030) | Trends, Outlook & Forecast." https://www.6wresearch.com/industry-report/indonesia-steel-market-2020-2026
10. S-GE Swiss Business Hub Indonesia. (2020). "Steel Industry in Indonesia: Market Overview and Business Opportunities." https://www.s-ge.com/en/publication/industry-report-or-video/20201-c5-indonesia-steel-report