The drop in finished steel demand in Indonesia caused by the spread of the coronavirus has pushed steel mills in the country to cut outputs. Moreover, some producers have decided to temporarily halt operations as the situation is not expected to improve in April.
Steel mills’ utilization rates have fallen to 40 percent and below, according to local sources, SteelOrbis has learned, from about 50 percent in 2019. “Some mills have already started to halt production even since January. Now it will be worse,” an Indonesian re-roller said. PT Ispat Indo, capable of producing 700,000 mt of long steel products per year, decided to temporarily stop operations recently, according to sources. Anyway, some large mills are still working and have not been considering production cuts so far.
Falling local steel demand has affected the appetite for import semis. “I doubt anybody wants to buy anything now, looking at our currency which is at a record low to the US dollar,” a source said. The IDR rate has fallen by eight percent over just one week to 16,457 to the dollar on March 24.
On March 24, the total number of coronavirus infection cases has reached 686 in Indonesia, up 107 cases in a single day, the biggest daily increase in Southeast Asia. Seven more people have died, with the total number of deaths in the country reaching 55.