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As We Approach The Year 2025, Here Are Five Challenges And Hopes For The Steel Industry In Construction

PT NS BlueScope Indonesia (BlueScope), a key player in Indonesia's steel industry, recognizes several challenges ahead in 2025. However, the Indonesian steel sector is expected to continue growing and is anticipated to support the construction industry with the specialized steel products it needs.

"We are committed to supporting domestic infrastructure development by providing high-quality steel that meets the requirements of strategic projects," said Irfan Fauzie, Vice President of Sales and Marketing at PT NS BlueScope Indonesia.

Overall, Indonesia's construction sector is projected to remain vibrant and serve as a major driver of the national economy in 2025. This will likely impact the steel industry, which is a crucial material for various infrastructure projects.

In this context, here are five challenges and optimistic outlooks that will shape the Indonesian steel industry in 2025.

Global Overcapacity and Competition from Imported Steel

The global steel industry is currently facing significant challenges due to overproduction. According to the Indonesian Iron and Steel Industry Association (IISIA), global overcapacity reached 632 million tons in 2022, and the OECD (Organization for Economic Cooperation and Development) forecasts an additional 158 million tons of capacity will be added between 2024 and 2026. This overcapacity has led to increased steel exports, particularly from China, which negatively affects steel producers in importing countries, including Indonesia.

Widodo Setiadharmaji, Executive Director of IISIA, noted that China's steel exports surged by 39% in 2023, reaching 92 million tons, intensifying competition in the global market. Additionally, in 2023, imports of steel from China to Indonesia rose sharply by 42%, totaling 4.05 million tons, creating challenges for local steel producers to compete.

The lower prices of steel from China are due to the support the Chinese government provides to its steel industry. This competition from cheaper imported steel creates an opportunity for the domestic steel industry to enhance its competitiveness through supportive policies.

One significant policy that presents both challenges and opportunities for the national steel industry is the Specific Natural Gas Price Policy (HGBT). The Indonesian government has recently extended this policy with the issuance of ESDM Decree No. 255.K/MG.01/MEM.M/2024, aimed at providing more competitive natural gas rates for the steel industry. With more affordable energy supplies, steel producers in Indonesia can manufacture steel more efficiently, boosting the competitiveness of domestic steel products in both local and international markets.

The HGBT policy is expected to reduce production costs for steel, allowing the Indonesian steel industry to maintain its domestic market share and expand its export markets.

Opportunities in Specialty Steel Products

The Indonesian steel sector is now shifting its focus towards specialty steel products that offer higher added value, such as electrical steel, railway steel, and other high-quality steels. These specialty products not only meet domestic needs but also have significant potential for export to global markets.

BlueScope recognizes this opportunity. So far, BlueScope has developed various specialty steel products that are essential for large projects, including high-rise building construction, transportation infrastructure, and power generation. Additionally, BlueScope is actively investing in improving product quality and innovation to tackle the increasingly competitive market.

Tag: BlueScope BlueScope Indonesia