The 10 million ton-capacity steel industry cluster in Cilegon, which will take investment of between US$3.5 billion and $4.5 billion, is estimated to be completed before 2025. This year, both companies will focus on the completion of Hot Strip Mill 2 that will cost $515 million. 

“We expect Hot Strip Mill 2 to operate in the first half of 2019,” said Silmy Karim, Krakatau Steel’s president director, on the sidelines of the 4th government task force team meeting on national steel industry development in Jakarta.

Hot Strip Mill 2, which will have a production capacity of 1.5 million tons per year, will be part of the Cilegon steel cluster. The completion of the steel cluster, Silmy said, would help reduce the country’s dependency on steel imports and would drastically reduce the country’s trade deficit. 

The national steel industry is currently facing tough challenges primarily due to global oversupply in China, the United States, Japan and many other countries. Those countries have started to decrease production.

Investment Coordinating Board (BKPM) head Thomas Lembong, who attended the 4th government task force team meeting, emphasized that competition in the steel industry around the world was becoming more intense. 

As steel prices tumbled, big countries, such as China, have continued to shift from a manufacturing economy towards a service economy, meaning that they have shift to less steel-intensive construction.

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