The industry minister of Indonesia, Agus Gumiwang Kartasasmita, has said that the government will ease steel scrap import rules, which have become much tighter since November 2019. This happened after the country’s president, Joko Widodo, advised his cabinet to increase the availability of the raw material for the steel industry, which needs to work at higher utilization rates to support the country’s infrastructure development.
Though there has been no timeframe for the cancellation of the strict rules for scrap imports, it will be done soon, most sources said. “As of today, the exporter still has to be registered in the country of scrap origin,” a trader told SteelOrbis. Moreover, sellers need to obtain numerous other permits from the government. “We can see the need for scrap metal in the domestic market. This [easing of import rules] will support the production of billets,” the minister said.
According to the official sources, currently local steel producers are working at reduced utilization rates - only about 40 percent - and imports of billet into the country have increased over the past couple of months. With the relaxation of import scrap measures, total shipments of scrap to Indonesia may reach even 5 million mt per year in the future. In 2019, total imports increased slightly from 2.5 million mt to 2.6 million mt, according to official statistical data.
At the moment, offers for ex-US HMS I/II 80:20 scrap in containers have been at $240-245/mt CFR Thailand and they should be at a similar level in Indonesia, but since trading has been restricted, there has been no clarity in the market. The latest offers for P&S from the US were at $280/mt CFR Indonesia. Ex-Australia HMS I/II 90:10 have been offered at $270/mt CFR Indonesia.