Message from Secretary General_February 2018

Posted on 28 February 2018

Source: SEAISI
Indonesia will play host to the 2018 SEAISI Conference & Exhibition. The event, with the theme “ASEAN Steel Industry – Next Leap of Transformation”, will be held at The Ritz-Carlton Jakarta, Mega Kuningan from 25 to 28 June 2018.
With a total population of around 260 million, Indonesia is the fourth most populous country in the world and the largest economy in South East Asia.  Blessed with abundant natural resources, Indonesia is attracting a lot of attention lately from the international investment community. This is especially after the release of a new study by PricewaterhouseCoopers (PwC) which projected that the country will become the world’s fourth largest economy in 2050, just behind China, India and USA.
Driven by domestic consumption and the government’s drive to improve infrastructure, Indonesia’s gross domestic product (GDP) has risen strongly over the last 10 years. Following a very respectable GDP growth rate of 5.0% in 2016, Indonesia’s economic growth rate edged higher to 5.07% in 2017. Going forward, the World Bank expects the country to see a steady economic growth of 5.3% per annum for the period 2018 to 2020. 

The steel sector in Indonesia, however, has been underperforming and failed to match the pace of economic growth rates in the country. After registering an impressive year-on-year  growth rate of 14% in steel consumption in 2012, which saw Indonesia’s total steel demand surging from slightly under 11 million tonnes in 2011 to 12.5 million tonnes in 2012, the country has since then been struggling to break through the 13 million tonnes consumption threshold.

Steel consumption in Indonesia peaked at 12.9 million tonnes in 2014 but then dropped sharply by 11.8% year-on-year to 11.4 million tonnes in 2015. Although the country’s steel demand bounced back strongly in 2016 to reach 12.7 million tonnes, Indonesia’s per capita steel consumption, at 49 kg, was still the lowest in ASEAN-6. 
Notwithstanding the above, the prospect is bright for Indonesia to see a rapid pick up in steel consumption in the coming years. This is in light of the fact that Indonesia’s public infrastructure investment will continue to expand while private investment will be boosted by easier monetary conditions and a more business-friendly regulatory environment. On infrastructure developments, the Indonesian government has allocated a state budget of US$ 33.61 billion for such projects in 2018.
The Indonesia Iron & Steel Industry Association (IISIA), in particular, is optimistic of the good prospects for steel consumption growth in the country. It has projected that total steel consumption in the country will reach 21 million tonnes by 2025.
The above optimism is also shared by Indonesia’s state-owned PT Krakatau Steel, the largest steel producer in the country. The company has set a target of becoming a 10 million tonnes per year steelmaker by 2025. It has currently a rolling capacity (longs and flats) of 3.15 million tonnes per annum. Among its new expansion projects are a 1.2 million tonnes blast furnace which is expected to be commissioned soon and a 1.5 million tonnes hot-strip mill, expected to be operational in 2019.
The second largest steelmaker in Indonesia, Gunung Steel Group, is also on an expansion path. Its subsidiary company, PT Gunung Raja Paksi, has commissioned a second reversing cold mill which raised its production capacity by another 200,000 tonnes per year.
Thus, it is fitting that the plant tour on the fourth day of the conference, on 28 June 2018, will visit steel establishments connected to the above two steel steelmakers. There will be two routes covering:
1. PT Gunung Garuda and PT Gunung Raja Paksi in Cikarang; and
2. PT Krakatau POSCO and PT Krakatau Osaka Steel in Cilegon.
We are currently in the process of working out a most interesting and informative programme for the conference and will provide more details as we go along. In the meantime, mark the dates on your calendar to make sure you do not miss out on the biggest steel event of the year in this region. 

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