Industry Report

Steel Industry in Indonesia

Business opportunities for Swiss suppliers

Steel plays an important role in the development of the manufacturing sector in Indonesia. Most of the manufacturing sector was built to cater to the rising demand of ASEAN 650 million instead of domestic market only. As recent as in the full-year 2016 Indonesia consumed 12.7 million tons of steel. However, domestic manufacturers could only produce 6.8 million tons, implying nearly half of Indonesia's steel demand needs to come from abroad, which provides great opportunities for Swiss companies.

Steel Industry

Dependent on steel imports

From an economic point of view, steel is the most important base metal with a global market value of USD 225 billion per year. Indonesia's total consumption of crude steel in 2016 was 14 million tons, while the total domestic production only reached 8 million tons. Therefore, to meet domestic demand, Indonesia has to import 6 million tons of steel products.

Steel demand is expected to rise strongly in Indonesia

The Indonesian Iron & Steel Industry Association (IISIA) said Indonesia is in big need of investment in the steel industry in order to expand the nation's steel production capacity. In the years ahead, steel demand is expected to rise strongly in Indonesia on the back of construction and infrastructure projects. Without investment, Indonesia will become increasingly dependent on steel imports.

Investments in the domestic steel production needed

The government aims to see domestic steel production capacity rise to 12 million tons by 2019, followed by 17 million tons by 2024, and to 25 million tons by 2035. However, this target - set in the National Industry Development Master plan (in Indonesian: Rencana Induk Pembangunan Nasional, or RIPIN) - will require private investor involvement.

Market overview and market opportunities for Swiss companies

Indonesia is a promising market in which many are trying their adventure. The report provided by the Swiss Business Hub Indonesia gives a market overview on the Indonesian steel industry and highlights business opportunities for Swiss companies, over all in the Automotive Manufacturing and Heavy Equipment Sector.

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