"As the basic component of economic growth in each country, steel industry is the mother of industry for machinery, appliance, automotive, maritime, and electronic industries," Industry Minister Airlangga Hartarto said on the sidelines of the South East Asia Iron and Steel Institute (SEAISI) 2018 Conference and Exhibition held in Jakarta on Monday.
He stated that steel producers in developing countries are anticipating an overcapacity of global steel production, which recorded a surplus of up to 700 million metric tons last year.
"In 2017, the global crude steel production saw a surplus of 1.7 billion tons, almost 50 percent of which came from China, while Southeast Asian production made up 1.5 percent of the total production," he noted.
He predicted the overproduction to have an impact on a number of aspects, including prices, job opportunities, utilization rate, and steel manufacturers` profit.
In addition, it also runs the risk of disrupting the continuation of industries, economic growth, and public welfare, he added.
On the other hand, the US, as the main steel consumer, has planned to protect its domestic steel industry by raising duties on imported steel by 25 percent.
The US policy will, no doubt, have an impact on the supply and demand in the global steel market and will eventually affect steel producers in developing nations, he remarked.
"Steel from other main steel producers, such as Japan, India, and South Korea, will likely flood the Southeast Asian market. This poses a challenge for us to anticipate any eventuality in the domestic market in the near future," he explained.
Domestic demand for crude steel currently stands at almost 14 million tons, while national crude steel production reaches 8 to 9 million tons per year. The rest is imported from China, Japan, South Korea, Taiwan, and India.
Reporter: Sella Panduarsa Gareta
Editor: Andi Abdussalam
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