21 December 2022 – Indonesia likes to be pilloried by Europe and other nations for dumping and export bans. But the country has clear goals for its industry. The new export ban on bauxite clearly shows this. But despite the Chinese stainless steel giant in its own country, is the domestic industry now running out of primary products? EU and US alloy surcharges jumped by more than 16% in some cases.
Stainless steel: Is Indonesia running out of intermediate products?
The Indonesian government has set itself the goal of building a complex downstream industry in its own country, and with visible success. And while Indonesia shows that it is capable of realising this goal, the arrogant attitude of the European Union towards the growing Asian economic power is taking its revenge.
Indonesia in the dumping and WTO pillory
The European Union, for example, has pilloried Indonesian stainless steel exports for dumping and subsidies. While at the same time an export ban on cheap nickel ores was complained about at the World Trade Organisation (WTO).
New export ban on bauxite
Even though Indonesia lost the case against the EU at the WTO, it effectively delayed the lifting of the nickel export ban for years by filing an appeal. And is now consistently implementing further measures, such as the export ban on the aluminium raw material bauxite, announced today (Wednesday).
Strengthening domestic industry
All with the background of strengthening domestic industry, generating higher added value at home, advancing the country and improving the welfare of Indonesian citizens. Actually, exactly what Europe and other Western nations had demanded, but which in return depend on Indonesian raw materials.
Lack of stainless steel supply
Now, according to recent media reports, there also seem to be shortages in the supply of stainless steel in the nickel-rich country.
Although Indonesia is the world’s leading exporter of stainless steel, the domestic industry is finding itself cornered as manufacturers lack the raw materials to sustain production while facing a flood of imported finished products.
Faced with these challenges, industrialists are urging the government to change its policies to save the dying domestic manufacturers of stainless steel products.
The Indonesian Stainless Steel Development Association (PPSSI) told The Jakarta Post that manufacturers are struggling to import enough stainless steel raw materials to produce finished products such as kitchenware, cutlery, sinks and washbasins, as well as many other items.
Is pressure now being put on stainless steel giants?
We don’t think the Indonesian government will look at this for long, and with appropriate pressure on major exporters such as Tsingshan Group, which includes stainless steel producer Indonesia Ruipu Nickel and Chrome, among others.
Otherwise, the dream of a domestic downstream industry could soon be shattered if domestic companies already complain about a lack of availability of input materials and prefer to export the products they need and produce in their own country.
Export tax on stainless steel?
It is possible that Indonesia will decide in the near future to impose a corresponding export tax on stainless steel, e.g. along Indian lines. This would lead to a tighter international supply, but especially to a strengthening of the domestic industry.
US stainless steel alloy surcharges increase drastically for January 2023
The first publications of alloy surcharges of US stainless steel producers for January 2023 show a partly drastic price increase. The alloy surcharge for AISI 304/304L has gone up by almost 14%. For AISI 316/316L even more than 16%.
EU alloy surcharges move up strongly
As already assumed by us yesterday (Tuesday), the first EU alloy surcharges for Grade 304 show an increase of more than 8%. The 316 alloys are even up by more than 10%.
Rising demand and raw material costs
In particular, higher raw material prices for nickel and molybdenum have contributed significantly to the increase in alloy surcharges. But scrap prices and energy costs (United States) also increased compared to the previous month.
The demand situation has also picked up. At the end of the year, many US service centres quickly emptied their warehouses to avoid tax disadvantages. Therefore, replacements must now be procured for 2023. This is not only noticeable in North America, but also in Europe.
Nickel prices in Asia continue to rise
After yesterday’s highly volatile price movements on the European LME, which moved nickel up considerably at the close of trading, nickel prices on the SHFE have also risen again to over $ 31,000 per tonne.
We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.