Source: Kontan.co.id | October 21, 2024

The Indonesia Iron & Steel Industry Association (IISIA) stated that Indonesia needs additional policies so that national steel producers can survive and compete with cheap Chinese steel products.

IISIA Executive Director Widodo Setiadharmaji said that steel products from China continue to flood the global market. According to IISIA records, China’s exports of steel products to the global market increased 39.03% from 6.64 million tons in 2022 to 9.23 million tons in 2023.

This trend continued in January-August 2024, when China’s steel exports rose 18.46% to 7.13 million tons, from the same period the previous year, namely 6.02 million tons.

Furthermore, Chinese steel imports to the Indonesian market increased by 43.71% from 2.85 million tons in 2022 to 4.05 million tons in 2023. The increase in Chinese steel imports also occurred in January-July 2024 by 33.92% to 2 .98 million tons, compared to the same period last year, namely 2.23 million tons.

“This makes it very difficult for national steel producers to compete with cheap steel products from China, both in the domestic and global markets,” he said, Friday (18/10).

Luckily, the ongoing Certain Natural Gas Price (HGBT) policy can maintain the competitiveness of the national steel industry. However, that wasn’t enough. Additional policies are needed so that national steel producers can survive the onslaught of steel products from China.

Several other countries have begun to close their domestic markets from the invasion of Chinese steel imports through the implementation of various trade remedies. For example, India will increase import duties from 7.5% to around 10%-12% to protect its domestic market from a flood of Chinese steel imports.

The United States also imposed a 25% tariff (Section 301) on Chinese steel products during the Joe Biden administration. Previously, the US had also increased import duties on imported Chinese steel by 25% (Section 232) when Donald Trump came to power.

In addition, Mexico also applies import duties of around 5% -25% for steel products from countries that do not have a free trade agreement with Mexico. Brazil also increased import taxes to 25% from the previous 9%-12.5% ​​for several types of steel products.

Furthermore, the European Union imposes a tariff rate quota of 25% as well as a Carbon Border Adjustment Mechanism (CBAM) policy which will be effective from 2026. This policy makes it difficult for steel products with high carbon emissions to compete in the European market.

Recently, Canada also imposed a 25% tariff on imported steel products from China to prevent market diversion due to policies taken by its trading partners.

“In fact, steel producers in Japan and Korea are also having difficulty competing with Chinese steel products and are asking for protection from their respective governments,” said Widodo.

The trade remedies policy, continued Widodo, is really needed because the domestic market has the potential to be flooded with Chinese steel products sold at dumping prices. This is because other countries are starting to protect their domestic markets, so China is shifting its sales to Indonesia.

Apart from tightening imports, national steel producers also need to implement Indonesian National Standards (SNI) as well as increase supervision over SNI product compliance in the market. This is important to ensure that imported products without SNI cannot enter the domestic market. “In addition, it is necessary to complete and implement a commodity balance so that import approvals can take into account the supply capacity of the national steel industry,” he stressed.