Indonesia needs stronger trade protections as China steel glut looms, says industry chief

[JAKARTA] Indonesia could be flooded with cheaper Chinese automotive steel plates as a result of US tariff hikes, warned Akbar Djohan, chairman of the Indonesian Iron and Steel Industry Association.

He cautioned that diverted Chinese hot-rolled coil, a key material for car manufacturing, could overwhelm local producers amid Indonesia’s growing automotive sector and weak trade protections.

“Asean countries are the primary target for this export diversion expansion, given their strong economic growth and government policies that support infrastructure development,” he told The Business Times.

Indonesia is especially exposed, relying on imports for 45 per cent of its steel, the bulk of which comes from China, according to data from the Central Statistics Agency.

This is more so as Indonesia’s safeguards and anti-dumping measures remain inadequate, said Akbar.

Competition dampens capacity growth

The country has a steel production capacity of 18.5 million tonnes per year, but local mills are operating at just 60 per cent capacity due to competition from imports.

In 2023, Indonesia’s iron and steel imports hit US$11.3 billion, with China leading the charge, supplying US$3 billion.

With steel demand expected to reach 20 million tonnes by 2025, the influx of Chinese steel could further suppress domestic production, forcing producers to shut down.

Akbar warned that if the government fails to tighten import controls, large-scale layoffs could occur within six months. He called for stronger trade protections, pointing to how other nations, including the US, are defending their domestic industries.

“If the US is implementing an America First policy to protect its industries, why shouldn’t Indonesia do the same? Our defence, energy and infrastructure sectors are heavily reliant on the availability of domestic steel,” he added.