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New commodity balance scheme may ward off Indonesia's steel import boom
The Indonesian steel industry is expected to reinvigorate domestic production in 2023, after the government introduced a commodity balance scheme in a bid to manage imports and local outputs flow to support a surging demand for the metal goods.
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Hot topic: A furnace operates at the nickel smelting facility belonging to PT VDNI on the Morosi industrial estate in Konawe, Southeast Sulawesi on Sept. 9. The company processes nickel to produce stainless steel. ( Antara/Jojon)
T
he Indonesian steel industry is expected to reinvigorate domestic production in 2023, after the government introduced a commodity balance scheme in a bid to manage imports and local outputs flow to support surging demand for the metal goods.
The Indonesia Zinc Aluminum Steel Industry Association (IZASI) stated that the commodity balance scheme would be a “breakthrough” in decision making for the volume of import licenses, as it would be based on centralized supply and demand data.
Under Presidential Regulation No. 32/2022, the government has laid out the groundwork of the commodity balance, which are meant to simplify trade licenses and give more centralized data for policymakers to determine trade policies.
In September, the government opened a portal for businesses to submit their production plans, import needs as well as local products absorption for next year. The portal includes a total of 24 commodities integrated into the system, including metals, rice, gasoline and liquefied natural gas (LNG).
According to the current timetable, government institutions would determine the final supply and demand plans within this month, while the commodity balance for 2023 are expected to be formalized in December.
“Not only will steel producers benefit, but final consumers will also benefit from getting a guaranteed supply,” IZASI chairperson Stephanus Koeswandi told The Jakarta Post on Thursday.
Stephanus explained that in recent years, the production capacity used to meet domestic steel demand had not been fully utilized, as seen by the average utilization rate of the domestic industry for coated steel which only hit below 50 percent.
