Posted on 03 Sep 2025
The Indonesian steel industry is suffering from slower demand resulting from a large cut in government infrastructure spending, Kallanish notes.
There have been recent widespread protests sparked by public discontent over increased taxes, increased income inequality and high inflation. In February, President Prabowo Subianto announced that IDR 306.7 trillion ($18.7 billion) would be cut from this year’s Indonesian national budget to fund priority government initiatives including providing free meals to 82.9 million school children and offering free health checkups nationwide. It was reported that the meal programme this year could cost over IDR 171 trillion.
The Public Work Ministry’s budget was reportedly consequently cut by 73.3% from IDR 110.95 trillion in 2024 to IDR 29.57 trillion this year, resulting in a massive reduction in public building and construction infrastructure projects.
“The steel market is slow because of this. Not many funds are going into construction projects, so demand for steel is down,” an Indonesian reroller says. His company has been cutting back on semis purchases which he estimates are 20-30% lower than last year.
There is no demand in the market,” a Jakarta trader says. “The exchange rate is also not good.”
Deliveries are ongoing and factories are still open, notes a Jakarta mill manager, who adds that office staff worked at home for several days during the protests. He sees rebar sales down by 20% from last year because of the infrastructure spending cuts. "The government need to lead first; then the private sector projects will follow," he says.
“The steel business is terrible because demand is bad,” another trader moans. Government infrastructure projects accounted for 60-70% of steel used in projects, he estimates.
The cut from 17% of the total national budget in 2024 to 3% this year is “significant”, according to the Indonesian Iron & Steel Association.
Indonesia's apparent steel demand was 18.6 million tonnes last year. Steel production was 15.8mt while the country's steel imports were 8.7mt, with exports at 5.9mt.
Source:Kallanish
